Giving to charities in 2021 fell by nearly 1 percent on an inflation-adjusted basis compared to 2020, according to the philanthropy sector’s annual seminal report released June 21.
“The story of charitable giving in 2021 is closely tied to the events of 2020,” aid Laura MacDonald, chair of Giving USA Foundation and principal and founder of Benefactor Group. “In 2021, Americans continued giving more generously than before the pandemic. However, the growth in giving did not keep pace with inflation, causing challenges for many nonprofits. In 2021, many donors returned to their favored causes, with many of the sectors that struggled in 2020 making a recovery in 2021.”
Charitable giving grew from three of the four sources of giving in 2021, with only giving from bequests declining. Big bequests in 2020 likely skewed 2020’s results. Giving grew or stayed flat to eight of the nine major types of charitable organizations, with only educational institutions seeing a decline. Despite uneven growth patterns, all four sources and seven of the nine recipient categories of giving experienced strong two-year growth, even when adjusting for inflation.
“Giving USA 2022: The Annual Report on Philanthropy for the Year 2021,” released June 21, reports that individuals, bequests, foundations and corporations gave an estimated $484.85 billion to U.S. charities in 2021. Total charitable giving in 2021 grew 4% over the revised total of $466.23 billion contributed in 2020. However, while giving increased in current dollars, it declined by 0.7% after adjusting for inflation.
Giving USA, the longest-running and most comprehensive report on the sources and uses of charitable giving in America, is published by Giving USA Foundation, a public service initiative of The Giving Institute. It is researched and written by the Indiana University Lilly Family School of Philanthropy at IUPUI.
The stock market and GDP recovered to pre-pandemic levels early in 2021 and continued to grow throughout the year. The S&P 500 grew 26.9% (21.2% adjusted for inflation) and the GDP grew 10.1% (5.1% adjusted for inflation), creating strong conditions for charitable giving.
Bolstered by strong market conditions, very large gifts by some of the wealthiest Americans reached a total of nearly $15 billion in 2021. These types of megagifts (defined in Giving USA 2022 as gifts of $450 million or more) represent about 5% of all individual giving in 2021, and played an important role in lifting individual giving.
“The research results show donors maintained their commitment to generosity with two-year growth in individual giving of 4.7 percent, adjusted for inflation,” said Peter Fissinger, chair of The Giving Institute, and Senior Advisor for Campbell & Company. “While Giving USA measures one type of generosity — charitable contributions — there are also signs that Americans helped their neighbors in myriad ways in 2021 that reflect the breadth and depth of their generosity.”
The environment for giving is evolving in multiple ways. Robust economic growth translated to strong performance by institutional forms of philanthropy such as foundations and corporations. Yet these economic indicators may differ from what most people experience in daily life. The broader effects of the pandemic may have shifted individual jobs, incomes, lifestyles and family and financial priorities, potentially affecting their giving habits.
“The novel circumstances of the current giving landscape underscore the need for this report and other high-quality research, which help us understand how widespread these changes are and how they are affecting philanthropy,” said Amir Pasic, the Eugene R. Tempel Dean of the Lilly Family School of Philanthropy.
In 2021, the U.S. had a strong year economically and also experienced inflationary pressures not seen in several decades. While the stock market performed well in 2021, there were some economic factors that may have affected nonprofits’ operations, such as labor shortages, supply chain interruptions and ongoing high demand for services.
“The growth that we see for the majority of the subsectors in 2021 is a reminder of the resilience and innovation that help to drive the philanthropic sector,” said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy.
This year, the Giving USA report features a new chapter dedicated to understanding giving patterns of donor-advised funds and their donors, featuring new, original research that has not been published anywhere else.
“Several of the subsectors that struggled in 2020, such as giving to health and giving to arts, experienced a recovery in 2021,” said Josh Birkholz, vice-chair of Giving USA Foundation and CEO of BWF. “Conversely, several subsectors that experienced strong growth in 2020, such as education and human services, did not fare as well in 2021. On the bright side, two-year growth for each of these subsectors was over 5%, even when adjusting for inflation.”