Fundraising Update

Welcome to Fundraising Update. This week, the “Giving USA” report is out, and we share four takeaways from the tally of 2022 giving and where fundraising is heading in 2023. Plus, charts that help tell the story of giving in recent years.

I’m Rasheeda Childress, senior editor for fundraising at the Chronicle of Philanthropy. If you have ideas, comments, or questions about this newsletter, please write me.

4 Takeaways From “Giving USA” and More

Fundraising had one of its worst years ever in 2022, down 10.5 percent when adjusted for inflation, according to numbers released in the “Giving USA” report. The annual study gives a comprehensive estimate of charitable giving by individuals, foundations, and corporations. In addition to analyzing the report’s data, my colleague Emily Haynes and I talked to fundraisers and development experts to find out how things have been going so far in 2023. All signs point to a difficult year ahead in fundraising. Here are four key takeaways from the new report and our interviews:

Nonprofits need to focus more on everyday donors. The report found that individual giving fell to its lowest share of overall giving ever: 64 percent. This marks the fourth straight year individual giving has represented less than 70 percent of all giving.

While the overall state of the economy is clearly the big force behind the decline in charitable giving, Danielle Vance-McMullen, an assistant professor at DePaul University who studies donor behavior, says turnover and staffing shortages on fundraising teams may have exacerbated the problem. When the economy is in flux, she says, charities need to put far more effort into their fundraising operations.

They also need to focus more on finding and keeping a wider pool of people who give small or medium-size gifts so donations aren’t so concentrated among the wealthiest, experts say.

“We’ve seen shops that have become almost exclusively big-game hunters, and it becomes part of the culture — you’re not a cool kid unless you’re on the major-gifts team,” says Laura MacDonald, head of the Benefactor Group, a fundraising consultancy. “Annual giving or middle giving are not the paths for significant career advancement. They aren’t the folks who get called into the board meetings to be congratulated for their successes. Culturally, we need to begin to recognize the people who work to nurture everyday donors.”

Nikita Hlazyrin, Project HOPE

Inflation bites. One of the big takeaways from the report was that inflation killed any gains fundraisers made in 2022. Before adjusting for inflation, five of nine causes saw modest gains in their fundraising. After inflation, only two saw gains: international giving and giving to foundations. What’s more, those were slim gains, 2.7 percent and 1.9 percent, respectively.

High inflation is impacting nonprofits’ ability to carry out their missions, says alicia sanchez gill, executive director of the Emergent Fund, a group that provides grants to small and new nonprofits for rapid-response efforts, mostly focused on LGBTQ issues.

“The price of everything has gone up,” gill says. “So if you’re running a shelter, the price of housing has gone up. The price of food has gone up. Often funds like ours are helping to fill a gap so that LGBTQ organizations can really hold on to those precious general operating funds as we see inflation continue to rise.”

Corporate and foundation giving is expected to slow. The Association of Corporate Citizenship Professionals conducted a survey, expected to be released in July, asking members about their corporate-contributions budgets for 2023. Only 29 percent have increased grant-making budgets this year, compared with 48 percent in 2021 and 42 percent in 2022. What’s more, 19 percent decreased budgets in 2023, making it the highest level of budget cutting since 2020, when uncertainty about the pandemic led 29 percent to slash budgets.

“Corporate investment in the community is slowing,” says Jeanne Metzger, vice president of marketing at the association.

A similar survey from Candid found that 27 percent of foundations plan to decrease giving in 2023. Last year, 44 percent planned to increase giving, while only 9 percent expected decreases.

“This year, the story seems pretty different,” says Cathleen Clerkin, senior director of insights at Candid. “Twenty-seven percent of folks are saying that they anticipate decreasing their giving this year, and about half of folks are saying that they’re planning on holding stable.”

Education loses the No. 2 spot. For years, education has been the second most popular cause, following religion. This year, it was bumped, by a slim margin, to third place. Gifts to religion represented 27 percent of total giving in 2022, while human services represented 14 percent and education 13 percent. Total donations to colleges, schools, and other education groups declined nearly 11 percent last year, when adjusted for inflation.

Josh Birkholz, chair of the Giving USA Foundation, notes that past research has shown education is a less popular cause among millennial and Gen Z donors than it is among boomers. That may be because younger college graduates are more focused on paying back the mammoth student-loan debts that older generations didn’t accrue, he says.

While these four takeaways are great, there are more insights to dig into from the report and our interviews. To find out how arts organizations rebounded over the pandemic years and how donors are trying to be more involved with how their donations are used, read the complete article.

Need to Know

13.4 %

— Decrease in individual giving from 2021 to 2022, adjusted for inflation

The data from the “Giving USA” report is helpful to nonprofits because it paints a vivid picture of American giving over time. We pulled out key numbers in some illuminating charts that show important giving trends.

In the visualization below, you can see how individual giving changed year-over-year since the Great Recession in 2008-9.

To see more depictions of the sources of giving in 2022 compared with 2012, the way inflation wiped out the gains some charitable sectors made (such as arts and culture), and the number of large gifts in the first months of 2022 compared with the same period in 2023, check out all the infographics.

Plus …

• The Perks of Having a Match. Raising money can be tough, especially in times of economic uncertainty. However, one thing that almost always helps is the promise of a match. Donors love knowing their contribution can do twice the good because it will be matched by someone else. This principle is at the heart of a $20 million match committed by Pivotal Ventures, Melinda French Gates’s limited-liability company, to encourage members of three donor networks to make gifts that increase women’s power and influence.

  My colleague Maria Di Mento reports that match is making progress. Last year, Sudnya Shroff planned to give $150,000 to help complete a film about a young Afghan woman who helped U.S. troops and was later relocated as a refugee. Then Shroff, a member of the Philanthropy Workshop, heard about the Pivotal effort.

  “This particular matching program could give me and my philanthropy double the power,” Shroff says. “That was the part that really excited me, that there was somebody, finally, that was willing to focus and target releasing funds in the world of women’s rights.”

  For more on the match, read the rest of the article.

Advice and Opinion

How Nonprofits Can Avoid A.I. Ethical and Legal Pitfalls. One big risk: feeding private information about donors into A.I. tools. If fundraisers want to write a thank-you note using A.I., experts advise stripping all identifying information from the samples they provide.

Why Grant Makers Should Reject Shiny New Things. Opinion: Social change takes a lot of time. Too often, foundation officials get bored and forget that.

Same Story Across the Pond

The issues of inflation and fewer donors reported in “Giving USA” aren’t distinctly American problems. Across the pond in Britain, charities are experiencing rising costs, higher demand, and fewer donors, Third Sector reported.

The publication cites research on small charities, which found that “everyday costs had gone up in the last 12 months and more than half faced higher energy bills.” Just less than half of those surveyed expected costs to continue rising and “six in 10 are making plans based on falling donations from the public.” The publication Civil Society noted that fundraising income from the top 25 charity events fell by over $6.36 million in 2022.

Multiple publications in Britain noted an open letter small charities sent to the prime minister asking for more support. “If small charities aren’t supported through these difficult times, we risk losing a crucial national asset,” the letter says. “Every day, small charities are closing or reducing services. We are exhausted, burnt out, and the mental health of our staff and volunteers is suffering.”

It will be interesting to see if the British government — which has already promised £100 million in additional support to charities — will do more and if we can learn lessons from how they handle these issues moving forward.