The State of Charitable Giving in America: 3 Key Trends
The state of charitable giving in the United States is shifting. As time goes on, there seems to be a decline in charitable giving nationally, which is impacting donations. The question is: where can we see this change occurring? And, how do we re-inspire donors to give?
Rick Dunham, as a board member of The Giving Institute and Chair of the Giving USA Foundation, assists in publishing the most widely respected annual report on giving in the U.S. Let’s explore the 3 key trends on the state of giving in the United States from his talk at the WE Prosper Summit 2019.
3 Ways Charitable Giving in the U.S. is Changing
Among the ten topline issues in giving identified by Rick Dunham, there are 3 key trends that are most important:
1. Giving has grown by 3.85% between 2016 and 2018, but has since slowed
Between 2016 and 2018, the United States experienced major growth in the area of giving. This was especially evident in 2017. However, in 2018, giving rates had decreased. Not substantially, but enough where organizations could be influenced by these flatlining rates in the future. If anything, giving by individuals fell 1.1% in 2018. This was the first time giving has dropped under 70%. This leads us to consider: was this drop in charitable giving in 2018 an anomaly? Or is this decline representative of a new trend? Is this drop telling of a shift in donor behavior or donor motivation?
Interested in learning more about Rick Dunham’s take on the state of charitable giving? Catch a recap of his keynote at WE Prosper 2019!
2. Tax law (and possibly tax reform) has had different effects on households in 2018
The drop in giving experienced in 2018 could be explained by the influence changes in tax law or tax reform has had on households across the U.S. Rick Dunham suggests that four dynamics with tax reform could have impacted the state of charitable giving:
- The standard deduction was raised to $24k for a household. So, if a family itemizes less than this amount in deductions, they may lose the incentive to give.
- There’s an expanded incentive for high net worth individuals who have the ability to give up to 60% of their adjusted gross income. Individuals could give more, but they may have run into state or local tax issues. So, this may have caused a depression on the potential to give more.
- With the tax reforms passed at the end of 2017, there was a major surge in giving. So, many donor-advised funds (DAFs) were set up as a result. But, this also led to deductions were capped and the highest income bracket decreased from 39.5% to 37%.
- Finally, with the tax efficiency of giving, many people decided to pull their giving into 2017 rather than 2018.
Based on these charitable giving statistics from 2018, it seems as though changes in tax laws and tax reform may have contributed to the decline in charitable giving we’re now experiencing. However, there’s no hard evidence to support that tax law changes caused this shift, but they may be a contributing factor. Organizations will only be able to tell in the coming year when more data can be collected on the state of charitable giving in 2019.
3. The number of non-donor households is increasing
The number of non-donor households in the United States is continuing to increase. This past year alone, many recipient organizations such as the arts, health, and human services experienced no growth whatsoever. Meanwhile, other sectors such as religious, educational, and public benefit organizations saw a decrease in donations received. And this isn’t simply representative of philanthropic depreciation now. If anything, the number of non-donor households has increased by 20 million households since the year 2000. The question is: what is driving this increase? And if donors are feeling less engaged, how can you reach them effectively?
How to Engage Donors as Giving Rates Decline
The challenge we’re facing now (as highlighted in Dunham’s three key trends and the charitable giving statistics of 2018) is that giving is declining. And it’s becoming substantially harder to find donors who are willing and inclined to give. So, how do we navigate this decline and motivate donors to give?
By targeting your outreach using predictive analytics, you can narrow your search and reach prospects who have the greatest propensity and capacity to give to your organization. So, instead of reaching all donors and waiting to see which individuals will give, it’s better to identify and communicate with individuals who fit the profile of your existing donors. Have the prospects you’re reaching out to given to organizations like yours in the past? And is their demographic information similar to those who donate to your cause?
Once you’ve gathered that information, it’s easier to understand the motivations, interests, and values of your donors. At that point, you can begin personalizing your messaging to communicate with them in engaging ways. These are the tools that will allow you to cultivate and nurture long-lasting relationships with your donors.
Catch a Recap of The State of Charitable Giving in the U.S.
Interested in learning more about the ten topline issues influencing giving in the U.S.? Watch Rick Dunham’s talk on the state of charitable giving in the United States, presented at the WE Prosper Summit 2019.