Kyle Penney

In the world of philanthropy, summer always brings the release of Giving USA, the annual report of philanthropy, produced as an initiative of the Giving Institute and researched and written by the Indiana University Lilly Family School of Philanthropy.

The annual report provides detailed analysis of the prior year’s giving and tracks important philanthropy trends. The headline from this year’s report is that overall giving from all sources combined was $499.33 billion, which is a 3.4% decline from 2021.

When adjusted for inflation, the decline is estimated at 10.5%. Four-hundred ninety-nine billion, three hundred thirty million is still a lot of money donated to charities last year. It looks like this when you include the zeros…$499,330,000,000.00. But at the end of the day, with inflation at levels not seen in many decades, it cost more to do everything last year, including serve the needy, rescue animals, conduct critical research and perform classical music. As a result of these higher costs, any decline in giving puts stress on the charities that are trying to help our friends and neighbors every day.

The annual report charts giving from four major sources: individuals, foundations, bequests and corporations. Out of those four sources, only giving from individuals declined in real dollars last year, from $339 billion in 2021 to $319 billion in 2022. Giving from foundations, bequests and corporations all showed slight increases in real dollars in 2022; however, when adjusted for inflation, all four sources of giving experienced declines. In the past 40 years, since 1982, total annual giving has only declined in four years: 1987, 2008, 2009 and 2022.

Giving from individuals is always the most significant portion of total charitable giving, representing 64% of total giving in 2022. The $20 billion decrease in individual giving reported for 2022, whether you view it as a 6.4% decrease in actual dollars or a 13.4% decrease in inflation-adjusted dollars, indicates that individuals were either less willing or less able to support charities when compared to 2021. When you read or hear about donors making large gifts it can be easy to think that your personal contributions don’t make a difference, but giving from individuals at all levels is required to support local charities and the annual report always confirms the vital importance of individual giving.

One likely explanation for the decrease in individual giving stands out in this year’s report. The data confirms that, over time, giving is significantly correlated to the performance of the stock market. So, it is no surprise that a 25% decline is the stock market could accompany a significant decline in charitable giving. The economic well-being of individuals is tied closely to the success and strength of the businesses for whom individuals work. When businesses experience difficulties such as falling stock valuations and rising costs, individuals also experience decreases in discretionary income as more resources are consumed to meet basic needs such as food and energy costs.

My college statistics classes go into overdrive when this report comes out each year, as I try to understand and interpret what the data means for philanthropy and foundations in particular. Foundation giving is a unique source of charitable giving which, according to the report, is growing steadily over time. Foundation giving is a unique category, because it is both a source of charitable giving and a recipient of charitable giving. Community foundations, private foundations and corporate foundations are created first as recipients of charitable contributions, but once established, they become sources of contributions to support a wide range of other charities.

The steady growth in foundations as a source of charitable contributions reflects more of a trend in HOW people choose to support charities. Instead of always giving directly to charity, people are using foundations and tools like donor-advised funds to maximize their giving. Some of the recent growth in foundation giving can be compared to evolutions in commerce from the use of cash to checks to credit cards. Each step doesn’t negate the previous step, but individuals adopt new methods of giving as they become more convenient and widely accepted.

My two takeaways from this year’s Giving USA report are: No. 1, giving was down in 2022 because the economy was down. When there is less to go around, there is less to give away. No. 2, the growth in foundation giving is a long-term trend that is reflecting a change in how people give rather than their interest in giving. The tools offered through foundations, such as donor-advised funds, can be an efficient way to maximize charitable resources for the greater good. Perhaps exploring how a foundation can support your charitable giving is your next best opportunity to Give Well.