Giving USA may have said it best in their press release for the latest 2019 report: it was a “complex year for charitable giving.” Philanthropists across the country immediately pounced on that language (and the data that followed), and soon the think pieces began to spread. Individual giving was down, other giving was up. And most importantly, the need for giving certainly hasn't diminished but influences like tax law changes and political and economic uncertainty are reshaping giving trends.
The Washington Post looked at the elephant in the room and asked; was the tax law to blame for these lukewarm numbers? Inside Philanthropy questioned the validity of the data considering that “the elimination of federal estate taxes has greatly limited actual reports of giving through estates in recent years.” And several more contradictory opinion pieces from both nonprofit and foundation executives were published; either declaring that the latest data isn't the end of American philanthropy as we know it, or that this is just the beginning of a philanthropic downturn.
So let’s dive in, starting with the bad news.
Overall giving saw a 1.7 percent decline when adjusted for inflation. But, let’s not forget that 2017 was a record year for giving. Although we’d like to see it, every year may not be a record breaker and overall giving still topped $427.71 billion.
According to the Giving USA Report, when adjusted for inflation, giving by individuals declined by 3.4 percent. This could be in part because American individuals and families no longer qualify to itemize deductions on their tax returns.
So yes, tax law changes affected charitable giving, but not nearly by the margin that philanthropists originally anticipated. The new tax laws come at a time when our country is fraught and having increasingly emotionally charged conversations about everything from bodily autonomy to climate change, and from immigration to economic disparities. In 2018, a trade war erupted with China, the stock market declined, and several natural disasters struck, meaning many individuals donated to relief efforts while many more are now dependent on the charity of others. Millions of people care deeply about our country and the world and are giving back. In fact, individuals gave $292.09 billion to causes in 2018.
And, there’s more good news.
Giving by foundations increased by 4.7 percent last year when adjusted for inflation. We see this as a strong indicator that foundations took note of changing political climates, increasing numbers of environmental disasters, and new tax laws, and stepped up to the plate. In fact, we recently shared how the new Opportunity Zones tax breaks have inspired many of our own clients to think critically about how philanthropy can (and should) invest in struggling communities – acting as both a watchdog and facilitator to ensure that poverty-stricken areas in the U.S. are receiving investments that actually support them and encourage upward mobility.
As the millennial population continues to become the largest force in our job market, companies have been forced to show their stripes as well, and corporate donations increased by 2.9 percent. It’s no secret that millennials prioritize working and buying from companies that have taken a social and political stance. Organizations are expected to care about their people and communities and they have begun to further invest in their public images. Regardless of whether these CSR and giving programs were inspired by a true desire to be better, or act as a Band-Aid to cover ethically questionable practices, corporations moved the giving needle enough to nearly counterbalance the dip in individual giving. This type of giving totaled $20.05 billion in 2018.
With all of its complexities, this year in giving underscores the need for multiple types of giving to adapt and support social and economic needs. The philanthropic ecosystem has always been collaborative and now, more than ever it’s showing its strengths by collectively addressing gaps and showing the power of diversity in funding.
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