The results for Giving USA 2024 have been revealed, and while some of the report’s findings shocked us, it made us realize that now more than ever, there is a monumental shift beginning in the foundation of charitable giving across the country. This in-depth analysis highlighted significant changes in donor behavior and a heightened importance on technology and donor acquisition. We hope these 11 key takeaways from the report not only offer a comprehensive overview of the current state of philanthropy but also provide valuable insights for nonprofits and funders looking to navigate and thrive in the current landscape of philanthropy in the US. Let’s begin.
Giving USA highlighted $557.16 billion in charitable giving for 2023. This was an increase of 1.9% year-over-year; however, when adjusting for inflation, charitable giving was down 2.1% year-over-year. Total giving as a percentage of GDP was 2% in 2023, remaining very close to where it has been for over 40 years.
Source: Lilly Family School of Philanthropy
This analysis unveiled mixed results from the sources of giving. Notably, individual contributions are declining as a share of total giving, although they still make up 67% of total giving. Foundation contributions, on the other hand, have grown from 6% to 19% over the past 40 years. Foundation giving includes family foundations, but it should be noted that donor advised funds were a part of individual giving. While 67% of giving is attributed to individuals, the decline of individual donors is a challenge that nonprofits need to address, with relationship-building at its core. Some of the solutions around building donor relationships begins with technology.
Reaching donors via multiple channels, practicing strong donor acknowledgement and stewardship with automated communications, and a 360-degree view of all donors through a comprehensive donor management software such as ExceedFurther are some ways that nonprofits can work to reverse the decline in donor acquisition and retention.
For more strategies on how to increase donor acquisition, retention, and engagement, view our webinar on, “The Biggest Challenges Facing Nonprofits Today.”
The report’s findings also emphasized the strong link between charitable giving and economic factors. In 2023, the overall performance of the economy surpassed many economists’ expectations, with GDP increasing by 6.3%, and increasing by 2.1% when adjusting for inflation. One key indicator that is referenced is total giving as a percentage of U.S. GDP.
Total giving as a percentage of GDP was 2% in 2023, slightly down from the 40-year high of 2.3% that was reached in 2021. This represents a challenge and an opportunity for the philanthropic sector to solve by providing more opportunities to give, increasing incentives, and reducing the barriers to giving. The report discusses, "frictionless approaches" that companies like Netflix and Amazon create as something that the philanthropic sector can work toward to make it easier for U.S. households to give. By making giving a seamless experience, nonprofits stand to benefit from garnering gifts from younger generations including Millennials and Gen Z.
Giving USA 2024 unveiled mixed results from the sources of giving. All sources of giving increased in 2023 in current dollars. However, when adjusting for inflation, only foundations and corporate giving increased year-over-year in 2023. Resilience in foundation giving is attributed to strong stock market performance in 2023 and so far in 2024. This trend highlights the varying impact of economic conditions on different sources of charitable giving.
Furthermore, individuals' giving reflects the uneven economic conditions in recent years. In 2023, giving by individuals declined by 2.4% when adjusted for inflation. Despite the challenges faced in 2022, several economic metrics performed well in 2023. Disposable personal income grew by 8.1% in the U.S., the S&P 500 saw a significant increase of 24.2%, and consumer spending, as measured by personal consumption expenditure, rose by 6.1%. These improvements, however, did not generate a commensurate increase in individual contributions, showcasing a missed opportunity by nonprofits.
The research highlighted a milestone in foundation giving, which crossed the $100 billion mark for the second consecutive year. Market growth in four of the last five years significantly boosted contributions from foundations, pushing giving to the second-highest level on record, when adjusted for inflation. This increase shows the growing role of foundations in the philanthropic sector and their capacity to drive impactful, meaningful change through financial support. It is important to note that donor advised funds are not included in giving from foundations.
Another interesting statistic included the growth of bequests in 2023, which reflected significant demographic shifts in the market. Bequests have consistently accounted for 9-10% of total charitable dollars over the past 40 years, and current demographic and economic trends suggest that charitable bequests may grow in the future. The wealth of older adults grew by 30% from 2019-2023, according to the Survey of Consumer Finances, indicating that there is a potential for contributions to increase through bequests.
A strong macroeconomic environment in 2023 helped boost corporate giving. However, giving by corporations remains the smallest source of charitable contributions, accounting for 7% of total giving. Corporate giving as a percentage of pre-tax profits has decreased from 2% over fifty years ago to 1% today. This appears to show an opportunity to increase giving from corporations. Corporate giving is evolving as companies continue to adopt a range of strategies, from sponsorships and cause marketing to a renewed focus on workplace giving, to make their philanthropic impact more effective and aligned to a broader business goal.
Over the last forty years, giving to religious organizations as a percentage of total giving has declined, in favor of other causes. Further, over the last five years, this decline in giving to religious organizations has accelerated. Human services in particular have seen an increase as a percentage of total giving over the last forty years, becoming the second largest cause area as a percentage of total giving. Additionally, giving to environmental causes and international affairs has increased over the last forty years. Together, the data shows that donors are giving to a wider range of causes than they used to.
Giving segments associated with wealthy individuals experienced the most growth in 2023. Contributions to arts, foundations, and education saw growth and reached record highs even when adjusted for inflation. These giving segments are closely linked with affluent donors, whose giving was strong in 2023. This shows the significant influence of wealthy donors in shaping philanthropic efforts and driving financial support for a variety of causes. It may also represent an emphasis by these organizations in stewarding major donors over generating first-time donors.
Giving to most recipient categories has returned in 2023 to pre-pandemic levels, with charitable giving seeing an all-time high in 2021 during the pandemic. The only two recipient categories that did not grow year-over-year in 2023 when adjusting for inflation are religion and international affairs. With overall giving levels returning to pre-pandemic levels, some of the unique giving patterns that emerged during the COVID-19 pandemic have normalized. This means that nonprofits who acquired donors during the pandemic likely need to do more to re-engage and retain donors acquired over the last few years, especially as many of those gifts were made online.
Nonprofits should engage those donors, across mail, email, SMS, and even social media to keep their cause and their organization top of mind. Additionally, nonprofits can garner more donations by building strong, lasting relationships with donors.
Giving USA 2024 showed that the nonprofit sector has shown both resilience and innovation in the pandemic era. Economic forces, technology, and demographic shifts will significantly shape the future of charitable giving. In particular: online giving has grown to represent more than 10% of total giving and has opportunities to expand further. Legacy giving may grow while younger generations look to engage by joining social movements and using their voices as a way of giving back. Artificial Intelligence will provide new possibilities for nonprofits, fundraisers and donors alike while posing challenges for engaging donors from a trust perspective. Even though there will be technological advancements, Dr. Una Osili who is the lead researcher for Giving USA states that,
"Trust is the core of philanthropy, it's the foundation. It's the glue that holds the sector together."
She emphasizes that the key to moving forward for nonprofits is how they can engage donors and at the same time build trust and relationships.
To learn more about Giving USA 2024 and hear a live panel conversation about the implications of the results for your organization, view our webinar featuring Dr. Una Osili, the head of research and publication for Giving USA.
"Insights and Perspectives from Giving USA's Lead Researcher: Unveiling the 2024 Results"
Technology is the solution to many of the challenges facing nonprofits today and to build trust with donors, we recommend that nonprofits invest in technology that: helps reach donors of different demographics across multiple channels; builds a comprehensive view of donors and their activity; and enables nonprofits to promptly acknowledge and steward donors in a personalized way to build stronger relationships. If you would like to learn how Arreva can help nonprofits achieve these goals and more, request a free consultation and demo at www.arreva.com/demo.