First, the headlines:
- Nonprofits in the U.S. received $55 billion less in donations in 2022 than in 2021
- Even more scary: of the $499.3 billion that was donated, a shocking $14 billion came from just six households, and 5% of all gifts were $500 million or more
- Although we don’t have 2022 data, we do know that in 2021, almost $73 billion of total donations went into donor-advised funds (DAFs) with no time obligation to go to an active nonprofit
- Donations as a percentage of disposable personal income dropped to a 40-year low of just 1.7%
The net net: Collectively, we nonprofits have a lot less in donations to serve our communities and our causes.
So what do we take away from this?
Nonprofits are hearing the same, tired, conventional advice we always hear: build up your savings; pay attention to your donors; consider new ways to raise revenue. But what else could we be thinking about?
- The drop in middle-class donations is a profound reflection of the fact that there are significantly fewer households in the middle class (there are more rich and many more poor, but fewer in the middle). And one of the many consequences of this re-ordering of our economic strata is how many nonprofits report that they are getting fewer mid-level donations – typically the bread-and-butter giving that sustains nonprofits. In response, some nonprofits are choosing to turn their full fundraising attention to mega-donors – with implications on how these organizations see their constituencies.
- Remember that while individual and foundation donations to nonprofits together account for about 10 percent of total nonprofit revenue (excluding hospitals and universities), government funding is about 30 percent. Protecting government funding to nonprofits is more important than ever.
Unexpectedly, these two contextual facts lead to two urgent public policy matters:
Advocacy for nonprofit funding from government – at the federal, state, county and city levels – should be a priority for nonprofits and the coalitions they belong to. A single domestic violence program or senior services organization might be able to increase their donations, but as a field, each will need government funds to meet the urgent demands they face, and that system needs improving.
HERE’S WHAT YOU CAN DO:
First: Join your field’s coalitions – whether it’s the California Council of Community Behavioral Health Agencies, the California Association of Museums, the California Pan-Ethnic Health Network, the California Partnership to End Domestic Violence, or one of the many other nonprofit coalitions. They will keep you informed on issues crucial to you and let you know when your voice is needed.
And of course, we also hope you’ll join us, the California Association of Nonprofits (CalNonprofits)!
Second: Next year – 2024 – is an election year. We need to think about how nonprofits can help more people vote, and vote for changes in taxes to reduce the shocking economic inequalities in our state and country. The drop in giving is not a drop in the sense of generosity that Americans have. It is due to growing inequality. And what we can do about growing inequality is adjust our tax system.
Finally: We nonprofits have to focus more attention on donor-advised funds. More than 10% of all individual giving is now going to DAFs, and that percentage continues to rise and rise. Without regulations, DAFs at the high end are too often a plugged-up pipeline between donors and the nonprofits carrying out the public good. The timing of the tax deduction needs to correspond to that of the benefit to the public.
And one more thing: Make a donation yourself to a nonprofit that has helped you in the past – where you interned or had an important job, that gave you a space to grow into yourself, that inspired you when you needed inspiration. A small donation will give them heart and will remind you that we are all in this together.
References:
“Four Key Takeaways from Giving USA’s Alarming Report on 2022 Giving”
National Philanthropic Trust: The 2022 DAF Report
– Jan Masaoka
