2021’s Surprisingly Strong Giving Followed by Dark Clouds

Even as 2022’s economic uncertainty clouds fundraising forecasts, this much is clear: The pandemic-born surge in charitable giving was bigger than anyone knew. And it stretched into 2021.

Charitable giving in America last year gave back only a fraction of the remarkable gains it recorded in 2020, according to findings released Tuesday from the annual “Giving USA” report. This is somewhat of a surprise. As 2021 opened, experts and nonprofit leaders had worried that support might fall off significantly as donors gained distance from the previous year’s seismic, giving-inducing events: the Covid-19 crisis and the racial reckoning touched off by the police murder of George Floyd.

But the new “Giving USA” estimates show that total giving remained essentially flat in 2021, dropping just 0.7 percent after adjusting for inflation, to $484.9 billion. The wealthy figured even more prominently in giving than in years past, accentuating fears that average Americans are becoming disconnected from charities.

That donors sustained high levels of giving in 2021 is particularly noteworthy because of this new finding: They were more generous during the pandemic’s first year than previously thought. Using new tax data on itemized charitable donations, “Giving USA” revised its estimate of gains in 2020, with total giving that year now recorded at $488.1 billion — an increase of 8.1 percent over 2019 even after adjusting for inflation. That’s the largest jump since 2012 and the fourth-largest in the 21st century. Previously, researchers had put the 2020 increase in giving at 3.8 percent.

Altogether, charitable giving grew 7.4 percent from 2019 to 2021, according to “Giving USA,” which is produced by the University of Indiana’s Lilly Family School of Philanthropy. (Inflation-adjusted estimates for the report’s figures are used throughout this article except where noted.) The full report will be released in mid-July.

“In 2021, after the extraordinary generosity exhibited in 2020, we started at zero again,” says Laura MacDonald, chair of the Giving USA Foundation and founder of the Benefactor Group, a fundraising consultancy. Still, philanthropic support reached high levels again last year — “a demonstration of the resilience of charitable giving.”

Some organizations report unprecedented levels of support. “We’ve seen explosive growth in giving,” says Jennifer Sampson, CEO of the United Way of Metropolitan Dallas. Buoyed by corporate backing of Covid-19 relief and a new racial-equity effort, the organization raised an average of $70 million over its 2020, 2021, and 2022 fiscal years — $20 million more than the average in the seven years before. Major donors also helped the organization complete a $100 million endowment drive three years early.

At the United Negro College Fund, giving reached $250 million in 2020, with donations flowing to the organization as donors responded to calls for racial justice in the aftermath of Floyd’s murder. The next year brought another $200 million. Before 2020, UNCF typically raised $100 million a year, says Diego Aviles, a top development executive with the group.

“We were definitely wondering if people’s attention would refocus elsewhere,” Aviles says. “But we have been able to sustain momentum.”

Support was particularly strong for environmental and animal-welfare groups during 2020 and 2021, according to “Giving USA.” Giving increases averaged about 8 percent during those two years.

Also, donors in 2021 rushed in to rescue arts and culture nonprofits after a dark first year of the pandemic, when giving dropped nearly 7 percent as groups were forced to move their performances and events online. Contributions climbed almost 22 percent last year — the largest increase in 35 years.

Only one of the nine charity causes that “Giving USA” covers saw donations decline over the two years. Health groups saw contributions fall 4.2 percent. Giving to religion was largely flat, dropping by just under 1 percent.

Contributions were fueled by the strong economy that began to take hold in late 2020 and dominated 2021, according to “Giving USA” researchers. Returns on S&P 500 stocks jumped more than 45 percent over those two years, while the country’s gross domestic product grew by more than 5 percent in 2021 when adjusted for inflation.

Inflation and a stock-market retreat, however, dampen the 2021 giving report and the outlook for 2022. Last year’s growth in giving — 4 percent before inflation is factored in — didn’t keep pace with prices that creeped upward. Now, with inflation roaring, many nonprofits are facing runaway costs and the threat of recession on the horizon.

Social-service and health organizations “are all kind of in this purgatory, waiting to see what comes next and how we get through,” says Michael Corey, executive director of the Human Service Chamber of Franklin County in Ohio. Many of the chamber’s more than 150 member organizations are seeing record demand, topping pandemic levels, Corey says. At the same time, there’s a sense of donor fatigue and worries that people aren’t paying close attention.

“One of the things keeping our agencies up at night is what happens when the pandemic supports end,” Corey says. “There’s going to be a big cliff.”

Other nonprofits report increasing salaries, high gas prices, supply bottlenecks, and more. “We didn’t have paper, we didn’t have envelopes, and, oh, now we don’t have labels,” Nicole Engdahl, a National Park Foundation executive, says about a planned mailing. “So it was like, Are you kidding me? It was one supply-chain [issue] after another.”

If philanthropy is going to step into the breach for nonprofits in 2022, “Giving USA” suggests that the wealthy will have to lead the relief effort. The new report provides fresh evidence of trends that point to the increasing dominance of big donors in philanthropy:

  • The influence of average Americans on charity is shrinking. About two-thirds of 2021 philanthropic support came from individuals. Four decades ago, that figure was 83 percent.
  • Billionaires play an outsize role in giving that’s growing larger still. Megagifts — donations of $450 million or more — accounted for 5 percent of all individual philanthropy, up from about 3 percent in 2020. The nearly $15 billion total included $5.7 billion donated by Tesla titan Elon Musk.
  • Nonprofits increasingly rely on foundations for support. Giving from grant makers accounted for almost one out of every five dollars donated to charity in 2021, its highest share ever. In 1981, grant-maker contributions made up only 6 percent of the total.
  • Giving vehicles favored by the wealthy are growing at remarkable speed. Contributions to public society benefit groups — the “Giving USA” category of nonprofits dominated by donor-advised funds — increased 35 percent since 2019, or nearly five times the 7.4 percent growth rate for all nonprofits. Giving to foundations, meanwhile, grew 10 percent from 2019 to 2021.

“The landscape is certainly shifting,” says Una Osili, a Lilly scholar who leads the “Giving USA” research. Osili notes that the greater share of giving by foundations and high-net-worth individuals reflects the country’s increasing concentration of wealth. “But at the same time, we cannot take away the role that individuals continue to play.”

Here are other highlights from the report and analysis from our coverage:

Despite the two-year surge in contributions, donors didn’t dig any deeper than usual. Total giving in current dollars amounted to 2.1 percent of the country’s gross domestic product, roughly the same rate as donors have been giving for at least two decades. Total giving has dropped three of the past five years and altogether has grown only 8 percent since 2016.

Many new donors in 2020 gave again in 2021. Fundraisers report unusually high rates of repeat giving in 2021. Forty to 45 percent of first-time givers to Doctors Without Borders in 2020 stuck around for 2021, up from the typical 30 percent, says Kim Goldsmith-N’Diaye, director of development. “That was really encouraging.”

The Covid-19 crisis is prompting more repeat giving than past emergencies — following a hurricane, say — because donors continue to have friends and families who get sick and face economic hardship, says Dale Bannon, national community relations and development secretary at the Salvation Army. “This was not just a one-time event. We found that new donors coming in were more likely to give a second, third, and fourth time.”

The Fundraising Effectiveness Project’s analysis of 2021’s giving to nearly 10,000 nonprofits found that the number of new donors in 2020 who gave again to the same charity in 2021 increased by 26 percent. The prepandemic retention rate for new donors was not even 10 percent.

Bequest contributions spiked, then dropped. Bequest giving, which is often volatile, grew by nearly 29 percent in 2020, then fell back more than 11 percent in 2019. Still, the $46 billion contributed last year is the second-highest total ever recorded by “Giving USA,” next to 2020’s runaway $52 billion.

Events spurred giving in 2021 and into 2022. Many nonprofits are reporting big turnouts and giving at in-person gatherings. Despite lingering Covid-19 concerns, the University of Central Arkansas launched the public phase of a $100 million campaign in April 2021 and found people eager for the kickoff events even though masks and other protocols were still in place.

“Moving forward with the launch gave people energy and enthusiasm to give,” says Maegan Dyson, assistant vice president of development. “They were glad to have events to go to, but they were also excited to be part of the campaign.” Not even a year after it went public, the campaign cleared its goal of 15,000 donors.

Corporate giving is a big question mark for 2022. America’s businesses donated $21.1 billion in 2021, up 18 percent. This is a rebound from 2020, when corporate gifts were down 6 percent.

The giving tracks closely with after-tax profits for business. Contributions in current dollars accounted for 0.8 percent of those earnings in 2020 and 0.7 percent in 2021 — roughly the norm since the mid-2000s but about half of what they were in the early 1980s. Observers and racial-justice advocates suggest the numbers would be higher if corporations were fulfilling their commitments announced in the wake of Floyd’s murder in 2020.

Reports from nonprofits about corporate support are mixed. Pharmaceutical companies, medical-device businesses, biotech firms, and others in the health-care field are driving phenomenal growth at the Morehouse School of Medicinein Atlanta. Focused on training medical professionals to care for people of color and underserved populations, the institution has raised nearly $200 million in the past two years — easily 10 times its previous annual totals.

“We had a tremendous two years,” says Harvey Green, senior vice president for institutional advancement. “The silver lining of the pandemic is that it brought to the forefront the disparities in health that we focus on.”

Share Our Strength, the national antipoverty and hunger organization, leans heavily for its events on the hospitality industry, which is still recovering from the pandemic, says Jill Davis, chief revenue officer. “We thought maybe they’d be back last fall, but they’re just returning this spring — to a great return.” Davis says it’s not clear whether support from corporate partners in food and beverage and consumer packaged goods will return in full.

“Everyone’s getting a little nervous with all of these signs of a recession,” says Corey of the Human Service Chamber of Franklin County. “And though I haven’t seen any signs of corporations pulling back at all, it wouldn’t surprise me one iota if they did.”

Arts and culture groups may be expanding their donor base. “Giving USA” researchers suggest that some arts major donors who backed pandemic relief in 2020 returned to their previous donation habits. Giving to the arts tends to move in concert with economic ups and downs, so the banner year also reflects 2021’s stock gains and booming economy, says Randy Cohen, vice president of research at Americans for the Arts.

Additionally, Cohen believes increasing work by arts groups in schools, health care, and community organizations is lifting their profile. “That type of community connectedness is making the arts relevant and making them a necessary good,” he says.

The Bonfils-Stanton Foundation, which supports Denver-area arts, seeded a Covid-relief fund with $1 million to support small groups often led by people of color. The fund quickly doubled in size, with arts donors stepping up who by habit usually supported major institutions like museums and the ballet. “It encouraged a lot of those donors to recognize the importance of the entire arts ecosystem,” says foundation president Gary Steuer.

As part of a new strategic plan, Bonfils-Stanton may create a fund for smaller organizations that similarly would be open to other donors. It would also continue grant making on racial-justice and equity efforts that it expanded during the pandemic. After assessing the effectiveness of the additional spending after three years, it could decide to make the increased grant making permanent as well, which would eventually drain its assets altogether, Steuer says. “If it means we become a long-term spend-down foundation, that’s something the board might decide is worth doing.”

Environmental and animal-welfare groups continue to show strength. Increasing support for climate-change efforts contributed to 16 percent growth in giving over 2020 and 2021, but parks and other nature-focused groups got a lift as people flocked outside to escape pandemic cabin fever. Giving to the National Park Foundation grew 64 percent from 2019 to 2021, reaching $128 million and likely headed higher in 2022, according to Engdahl.

“People went outside more,” says Phil Hills, CEO of the Marts & Lundy fundraising consultancy. “The only way you could be with each other was to go walk through a national or local park” or some other outdoor venue.

With months remaining in its 2022 fiscal year, the Wisconsin Humane Society has already raised about $8 million — some $2.5 million more than its giving in 2019.

Separately, the group’s bequests soared to $4 million in 2021 — up from $2.6 million in 2020 — and look to top that in 2022. Increased name recognition is helping, says Jenny Mueller, vice president of development, noting that the society has expanded from three to five shelters statewide.

“Sometimes people leave us large gifts, and they’re not even in our database,” Mueller says. “They must have adopted an animal or seen a commercial and made a connection to our work.”

The pandemic hit health groups hard. Giving climbed 2.9 percent in 2021 but dropped over two years by more than 4 percent.

Suzie Upton, chief operating officer at the American Heart Association, says things are looking up. Giving in the group’s fiscal year 2022, which is nearly closed, is running 10 percent ahead of last year. Revenue from events — mainstays of its fundraising — is up 44 percent, thanks to the restart of significant numbers of walk-a-thons and in-person gatherings as the pandemic eased.

Still, the organization has to make up lost ground in donor acquisition, since Covid-19 shut down most of the events that attracted new supporters, Upton says. “We’re missing about 24 months of people coming into the pipeline as new donors.”

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