Each year, those of us in the nonprofit sector eagerly anticipate the release of the Giving USA report. As the longest-running and most authoritative report on charitable giving in the United States, it provides invaluable insights into the state of philanthropy. This year’s report, detailing giving in 2023, offers offers reasons for celebration and highlights areas on which to remain focused.

Just after the release of this year’s numbers, Ben Golding (CEO, Advancement Resources), Laura MacDonald, (Principal & Founder, Benefactor Group) and Megan Simmons (Consultant and Senior Writer, Benefactor Group) joined me for a discussion analyzing this year’s results. What follows is a summary of our discussion, but I do recommend you check out the whole discussion here.

The Headlines: Looking Beyond the Surface

At first glance, some might view the media headlines about Giving USA 2024 with concern because most trumpet things like: “Charitable Giving Continues Its Decline,” or “Giving Flatlined Despite Economic Strength.” However, as we discussed, it’s crucial to look beyond these surface-level interpretations.

The reality is that the total estimated charitable giving in the U.S. reached $557 billion in 2023. While this represents a slight decline of 2.1% when adjusted for inflation, it’s important to remember the context. 2023 was a year marked by economic uncertainty, with many anticipating a recession that ultimately didn’t materialize. Despite these challenges, Americans still gave over half a trillion dollars to charitable causes.

As MacDonald pointed out, “Giving has to grow from zero. The clock resets every January 1st.” When viewed through this lens, $557 billion raised in 365 days is truly remarkable. It’s also worth noting that over a four-year period, charitable giving has grown by 28%, or $123 billion. These are figures worth celebrating.

The Cornerstones of American Philanthropy

Individuals continue to be the backbone of charitable giving in the U.S., accounting for two-thirds of all donations in 2023. Foundations increased their footprint to 19% of total giving, while bequests grew to 8% and corporations contributed 7%.

The popularity of donor-advised funds (DAFs) among donors continues to grow. The panel had a nuanced discussion about the pros and cons of DAFs, ultimately viewing them as a valuable tool in the philanthropic toolbox. They allow donors to separate the act of making a charitable gift from the decision of where to allocate those funds, providing flexibility and potentially encouraging more thoughtful giving.

Sectors Seeing Growth

After the figures were adjusted for inflation, most sectors saw only slight declines. It’s encouraging that in current dollars, giving grew for all nine major recipient subsectors. Education, arts and culture, and public benefit organizations saw particularly strong growth. This uptick may reflect donors returning to their pre-pandemic giving priorities after focusing on immediate needs during the height of COVID-19.

The Influence of High-Net-Worth Donors

Our discussion touched on the declining contributions from the “Philanthropy 50”—America’s biggest donors as tracked by the Chronicle of Philanthropy. Be cautious about reading too much into this trend—total giving remained resilient even without these mega-gifts, suggesting strength in the broader donor base.

Moreover, many transformational gifts are still happening, just perhaps not at the billion-dollar level that makes headlines. Opportunities for engaging high-net-worth donors are significant with more billionaires in the U.S. now than ever before.

Preparing for the Great Wealth Transfer

Bequest giving saw a 4.8% increase in 2023, potentially signaling the beginning of the long-anticipated transfer of wealth from the Baby Boomer generation. With an estimated $84 trillion set to change hands in the coming decades (of which $12 trillion is projected to go to nonprofits), organizations need to be prepared.

In our discussion we all agreed that the Great Wealth transfer is has already begun and is only going to become an even bigger factor in philanthropy. The wealth transfer won’t happen overnight and won’t be distributed evenly. With this transfer on the horizon, nonprofits have a unique opportunity to refine how they engage donors effectively, particularly younger generations who may inherit significant wealth. Look for ways to adapt communication strategies and provide meaningful engagement opportunities with this younger demographic in mind.

Embracing a Broader Definition of Philanthropy

The definition of philanthropy is evolving, especially among younger generations, to include not just financial gifts, but also donations of time, talent, and testimony (advocacy). While these non-financial contributions may not directly impact the Giving USA data, they are crucial for building engaged donor bases. Research shows that those who give in non-financial ways are more likely to make monetary donations in the future.

Key Takeaways for Nonprofits

• Celebrate resilience: Despite economic uncertainties, charitable giving remains strong. This resilience is worth recognizing and building upon.
• Invest in your fundraising capacity: Organizations that invest in their ability to engage donors effectively are likely to see better results. Empower your board members and other stakeholders by educating them on the importance of focusing on individual giving programs.
• Think long-term: While year-to-year fluctuations can be important, it’s crucial to look at longer-term trends. Apply this mindset to data from both overall giving and individual campaigns.
• Engage the whole family: Involving younger family members in philanthropy can help build lasting inter-generational relationships.
• Embrace multiple forms of giving: While financial contributions are crucial, don’t overlook the value of time, talent, and advocacy. These can lead to deeper engagement and future monetary support.
• Be prepared for changing foundation landscapes: Some family foundations are choosing to spend down their assets rather than exist in perpetuity. This change could present both challenges and opportunities for nonprofits.
• Encourage corporate philanthropy: While corporate giving grew slightly, it’s not keeping pace with corporate profits. There’s room for companies to step up their philanthropic efforts.

Looking Ahead

As we reflect on the Giving USA 2024 report, it’s clear that the philanthropic sector continues to demonstrate remarkable resilience in the face of economic uncertainties and global challenges. By focusing on building strong relationships with donors, adapting to changing giving patterns, and celebrating the many forms that generosity can take, nonprofits can position themselves for success in the years to come.

The data from Giving USA provides valuable benchmarks and trends, but ultimately, philanthropy is about people—donors, volunteers, and those served by nonprofit organizations. By keeping this human element at the forefront, we can work together to nurture a culture of generosity that will continue to make a positive impact on our world.

Don’t miss out! Click here to watch the full discussion, and if cool graphics are your thing, you can download one created by the Benefactor Group.

The full Giving USA 2024 report is coming soon—order your copy today if you haven’t already!