Giving season is upon us. For many nonprofits, the biggest fundraising days of the year will fall over the next five weeks. We’ve rounded up recent Chronicle reporting to help you plan and forecast as 2021 comes to a close.
Many donors say they plan to keep giving.
While donor surveys aren’t always reliable indicators of future fundraising success, several recent studies suggest that donors at least plan to be generous.
Despite increasing economic anxiety among America’s middle class, a greater share of people who gave at least $20 in 2020 plan to continue to give than at the start of the Covid-19 pandemic, according to the results of a July survey of 630 donors conducted by the research firm Campbell Rinker.
Eighty-seven percent of those donors said they plan to continue giving — a sharp increase from the 78 percent who said that in September of 2020. Still, of those donors, 59 percent said they plan to give “more sparingly or carefully” than before. Seventeen percent of donors said they plan to give less in 2021 than previously.
More than one-third of respondents in a survey of 1,024 nonprofit donors said they had given more during the pandemic than before it started. The study was conducted in June and July by the Blackbaud Institute and Edge Research.
Among donors who started giving to a nonprofit during the pandemic that they hadn’t supported before, 29 percent said they were very likely to follow up that first-time contribution with a monthly gift.
Data signals a potential return to pre-pandemic patterns of giving.
New analysis from the Fundraising Effectiveness Project, a research effort of the Association of Fundraising Professionals Foundation for Philanthropy and GivingTuesday, suggests the strong giving of 2020 and the first quarter of 2021 has begun to taper off.
The slowed growth in giving in the second quarter of 2021 could signal potential volatility at year-end, but the news isn’t necessarily bad. While giving has not grown as sharply as it did in 2020, the pace of giving and the numbers of donors have remained roughly the same or even a little higher, the report found. The estimated number of donors increased by 0.7 percent in the first half of 2021 over the same period in 2020, while the total amount of money given is projected to have increased by 1.7 percent.
One indication that donors may revert to their pre-Covid patterns: In a reversal from last year, smaller organizations are experiencing fundraising growth in 2021, while larger groups are seeing some contraction.
In addition, causes that experienced sharp declines in giving in 2021 — arts and culture groups, international and foreign affairs organizations — are now seeing either growth or very small losses. At the same time, health and human-service nonprofits, many of which had exceptional growth in 2020, are raising less now.
Despite moderate economic growth, the outlook remains positive for year end.
Charities face a steady, though uneven, economic outlook as they enter the final month of the year.
While Covid-19 cases are on the upswing once again in many states, the economy continued to grow in the third quarter, and the stock market is doing well. That should indicate positive conditions for fundraisers. A good economy is generally good news for giving.
But price inflation and hiring troubles continue to depress the economic outlook for many American households, which could affect the charitable disposition of middle- and working-class households. Patrick Rooney, an economist at Indiana University’s Lilly School of Philanthropy, said the ongoing effects of the Covid economy could exacerbate long-term downward trends in donor participation.
But John List, a University of Chicago economist who studies charitable giving, is optimistic about what’s to come. “With the markets at all-time highs and the economy slowly opening up, the charitable holiday cheer season should be a good one,” List said.
Pandemic-era tax breaks for giving are set to expire. Here’s what could change before the year ends.
In response to the pandemic, Congress enacted a tax break allowing people who don’t itemize their taxes to deduct donations to charity, something they couldn’t do previously. The current limit is $300 for individual filers and $600 for couples.
The “universal” deduction has been popular, but lawmakers have resisted calls to make it permanent. Nonprofit lobbyists hope an extension of the universal deduction will be included in a broader package of year-end tax provisions. Bipartisan legislation in Congress would extend the break through the 2022 tax year and increase the maximum deduction to $4,000 for single people and $8,000 for couples. Such year-end tax bills are often popular and bipartisan because they typically include a wide range of benefits for both businesses and individuals.
Congress also raised the cap on deductions from 60 to 100 percent of adjusted gross income. The limit on charitable deductions for taxpayers who itemize is scheduled to revert to 60 percent at the end of this year.
Some advocates of preserving the tax breaks acknowledge that these measures may not have a big impact on giving, but they are concerned about seeing hard-fought legislative gains slip away at a time when they are working to expand incentives for charitable giving.
For example, Cherian Koshy, a nonprofit consultant and former director of development at Des Moines Performing Arts, said the current $300 and $600 limits on the charitable deduction for people who don’t itemize is likely too small to significantly change donor behavior, and very few people give away more than 60 percent of their adjusted gross income regardless of the tax benefits.
“It’s not going to make or break any nonprofit in the grand scheme of things,” he said, although he added that all tax breaks for charitable giving are helpful to nonprofits to some degree.
The ultimate challenge for charity advocates and policy makers is to pursue bigger, broader incentives for giving that would notably expand the share of people who donate to charity each year, Koshy said. Researchers have found that while overall giving continues to increase, that is due mostly to increased generosity by major donors. The share of Americans who donate to charity has steadily declined in recent years.
Dan Parks contributed to this article.
