Forward backward,” Khairil Zhafri

This article is based primarily on Giving USA 2020: The Annual Report on Philanthropy for the Year 2019. Please register today while space remains available for our special webinar with Dr. Patrick Rooney, executive associate dean for academic programs at the Lilly Family School of Philanthropy, and Laura MacDonald of Giving USA and the Benefactor Group on June 18, 2020, at 1 pm Eastern time, where they will review this year’s findings in more depth and answer additional questions from participants.

As you look at the figures in this year’s Giving USA report, you can be forgiven if they feel a bit irrelevant. So much in our landscape has changed since January. The United States has been in the midst of two pandemics—one chronic and long in the making, in the guise of active and virulent racism that informs every social structure with which we interact, and the other, the COVID-19 outbreak, of more recent and rapid onset. The combination of the two with the impending election has created an existential crisis for our nation, but it is one that is moving many to action rather than passivity.

Federal, state, and local governments are all responding in their own ways—sometimes quite pathological, sometimes deeply thoughtful and even frame-breaking —and donors and philanthropy are being pushed to step up and weigh in. It’s unclear how all of this will play out. We know that state, local, and personal budgets will all be hit hard, since unemployment is higher than at any time since the Great Depression and the childcare infrastructure communities need to allow people return to work has been decimated. Nonprofits are working overtime to recalibrate, both in terms of their complicity in racial disparities and in terms of budgets and programs.

Still, as we know from the last recession, donors do not go away altogether during downturns. They may pull back or turn to other issues that appear more important, and they certainly respond to the needs of their household budgets, but they do not just disappear, and it is part of our jobs to keep them engaged—not just as donors, but as participants and constituents. All of this leads the usually reserved Dr. Patrick Rooney to comment that a report about last year’s giving, never a perfect predictor, seems a bit surreal in the current moment under the light of recent events.

What, then, can this report on the state of philanthropy in 2019 tell us? Maybe more than might be evident at first glance, but you have to look both backward and forward to get the full picture.

When we look back, we can see what occurred during the last recession. This was, conveniently, the topic of our last edition of the Nonprofit Quarterly, because we have known for some time that a downturn was coming. In that collection of articles, and particularly in “Nonprofits in Recession: Winners and Losers,” we noted that donors treated some fields as more critical than others at that moment. Human services saw an uptick in donated revenue before leveling out, but the arts suffered all the way through the recession, leveling out only later to begin a growth trend that peaked last year.

Both at the beginning of the last recession and as we head into this one, the general level of giving was particularly high. Last time, it plummeted the year following as the recession started. Here’s what that looked like:

So, indeed, the good news is that giving was up last year overall, and in all but one category of donor and recipient. For a number of fields—education; arts, culture and humanities; and public society benefit—the increases in giving, even after adjusting for inflation, were in the double digits. Giving to health was at its highest level ever. Only giving to international affairs declined, and that was after a few strong growth years.

But all of this, as you can see, suggests little about 2020 other than that we have every reason to expect a serious recession in giving. But we want to caution that this is not necessarily immutable. Far from being passive participants, we act upon the economy with our responses to the energies of the times. There are things we can and must do.

What Happened in 2019

Readers can look at the figures below to see how various fields fared in 2019, and how much was given from which sources, but we will stay for now on the most notable data points.

One thing that stood out for us is the fact that for only the second time since Giving USA data began to be published in 1955, individual contributions constituted less than 70 percent of the whole charitable giving pie. Put this in the context of this year’s mega-gifts (all those over $300 million) and you may begin to get a sense of how much of the giving landscape, like the political landscape overall, is affected by really big donors and how much work needs to be done to re-engage our more modest supporters.

This past year, according to Rooney, mega-gifts from living donors and bequests recorded by Giving USA were a little higher than the year before, mostly due to Barron Hilton’s estate, which donated $3.4 billion to the Conrad H. Hilton foundation, more than doubling its asset base. Living donors—specifically, Michael Bloomberg, Jim Walton, and the Omidyars—gave a cumulative total of $3.17 billion. Overall, Giving USA logged a dizzying $6.57 billion in mega-gifts from the living and the dead.

And, let’s be clear, there is nothing magical about that $300 million threshold. Many of us might consider $100 million or even $3 million pretty colossal, and most of us don’t have a snowball’s chance to see any of those kinds of gifts.

So, long story short…in terms of individual giving, the trend continues toward “dollars up and donors down.” In other words, there are fewer donors, with some small portion of them donating enough to hide the falloff of many other donor households. NPQ has published a number of articles on this anti-democratic trend. We have said this before, but the old adage, “You take the king’s dollar, you do the king’s bidding” has to be kept in mind here as we all consider the expanding wealth gap and the future of philanthropy and civil society.

What We Must Do Differently

One measure that could alter this trend, says, Rooney, is passing into law the universal charitable deduction or tax credit. This measure, which has recently been picked up by a bipartisan group of US senators, would reestablish incentives for giving at lower income levels. The CARES act contained a pitifully weak version of this, with an “above the line” universal charitable deduction capped at $300 per taxpayer, but the fact that the measure was included at all may portend future breakthroughs. A number of national advocacy groups have been working hard to pass an expanded measure. Rooney himself recently proposed in his article that the measure be uncapped and passed immediately to address the loss of less monied donors. He wrote with some urgency:

According to Lilly’s research for Giving USA 2019, during the Great Recession, household giving fell by almost 17 percent in inflation-adjusted dollars. It took almost a decade to catch back up to where total household giving was before the Great Recession. While there are many wonderful stories of giving to the COVID-19 crisis and its victims—and we know that giving during disasters does not reduce giving to other charities—it is also clear that this public-health-induced recession is likely to be more serious than originally thought. It was reported in May this year that the new nine-week total for initial unemployment claims is 38 million, which is on top of the number of those who were already unemployed before the COVID-19 recession began. This new nine-week total for initial unemployment insurance claims already exceeds the total unemployment insurance claims filed during the Great Recession (37.1 million). This suggests that there is a need for substantive solutions, ones that are longer lasting than just the calendar year 2020. Hence, the need to “go big.”

Laura MacDonald of Giving USA and the Benefactor Group, however, also believes that the answer lies in ourselves and our orientation to donor/constituent engagement. Here we come to looking forward. For instance, when we noticed there was an unusually robust 13.1 percent expansion of giving in the public-society benefit sector, despite the fact that workplace giving programs have been facing serious declines, we assumed it had to be due to the growth of giving into donor-advised funds (DAFs). But MacDonald says the figures also indicate a lot of giving to nonprofits that advocate for key issues—the broad public-benefit support category comprises not just funding intermediaries, but advocacy organizations.

“In the public-society benefit sector,” said MacDonald, “there are the divergent forces of United Way in decline while national donor-advised funds grow rapidly. Somewhere in the middle are groups that advocate for fair elections, racial justice, legal aid, and immigrant rights which attracted large gifts and public attention in 2019.” For years, NPQ has written about the need for greater support of advocacy in our sector. Perhaps 2019 was the year that the importance of this need began to sink in for donors.

MacDonald says that much may depend upon engagement with younger donors who participate in a different and more active way than their older counterparts. She believes their effect may be undercounted because of that.

“The size of the millennial generation suggests significant philanthropic potential,” she writes in an email to NPQ, “but traditional measures of formal philanthropy may underestimate their current impact. When it comes to charitable contributions, millennials’ giving favors technology platforms, monthly giving, and loyalty to causes versus organizations. But they also express generosity through voluntarism, digital advocacy, consumer choices, and support for GoFundMe-style informal philanthropy.”

MacDonald includes some examples from the 2020 report of increased gifts to advocacy:

  • NAACP Legal Defense and Education Fund: gifts of $15 million (Open Society Foundation) and $1 million (Blake Lively and Ryan Reynolds);
  • The Immigration Litigation Fund, housed at Borealis Philanthropy, with funding from foundations including Ford, NoVo, and Open Society, made $2.2 million in grants to 36 organizations dedicated to providing legal aid for immigrants.
  • Funding for LGBTQ issues set fundraising records, exceeding $200 million for two consecutive years.

If this trend toward giving to advocacy is real, and becomes amplified as time goes on, we may be in for a really unpredictable and exciting year. Rooney assures us that, despite the widespread belief that politically active people give less to nonprofits in election years or in response to disasters, that dynamic is not borne out by research.

All of this suggests that the actions of many donors, far from being disconnected from what is around them, are acutely sensitive to it when they become and remain engaged and when they can see a need and progress. Their donations themselves may be lessened by a recession, but how that will happen in the year to come is likely to reflect larger sensibilities. which are, for many, focused now on issues of inclusion and racial and economic justice.

This will not affect just advocacy organizations, of course. After suffering a serious and prolonged storm of revenue hits during the last recession, the Arts, Culture, and Humanities subsector has, over the last five years, grown at a faster rate than overall giving, coming in last year with a 10.6 percent increase. It’s not clear whether we will see a repeat or even a worsening of that dynamic during the present recession, adding in the need for physical distancing at venues from museums to performance spaces, but it may be that they have learned lessons about relevance and alternate forms of presentation that can bridge them more deeply into community this time around. Cultural institutions have, in fact, been challenged about their colonialist tendencies for more than a few years; perhaps they’ve been tempered and prepared to show up differently, as central necessities, for our national identity check.

Below are summary data for what donations were received in 2019, by field:

What was received, by field:

↑ Giving to religion increased 2.3 percent between 2018 and 2019, with an estimated $128.17 billion in contributions. Adjusted for inflation, giving to religion was essentially flat, increasing 0.5 percent in 2019.

↑ Giving to education is estimated to have increased 12.1 percent, to $64.11 billion. Adjusted for inflation, giving to education organizations increased 10.1 percent.

↑ Giving to human services increased by an estimated five percent in 2019, totaling $55.99 billion. Adjusted for inflation, giving to human services organizations increased by 3.1 percent.

↑ Giving to foundations is estimated to have increased by 2.5 percent in 2019, to $53.51 billion. Adjusted for inflation, giving to foundations was essentially flat, increasing 0.6 percent.

↑ Giving to health organizations is estimated to have increased by 6.8 percent to $41.46 billion, an increase of 4.9 percent, adjusted for inflation.

↑ Giving to public society benefit organizations increased an estimated 13.1 percent, to $37.16 billion. Adjusted for inflation, giving to public society benefit organizations grew 11.1 percent.

¯ Giving to international affairs is estimated to be $28.89 billion in 2019, staying relatively flat compared to 2018 with a decline of 0.4 percent. Adjusted for inflation, giving to international affairs organizations declined 2.2 percent, after two strong years of growth.

↑ Giving to arts, culture, and humanities is estimated to have increased 12.6 percent to $21.64 billion. Adjusted for inflation, giving to the arts, culture, and humanities subsector increased 10.6 percent.

↑ Giving to environment and animal organizations is estimated to have increased 11.3 percent, to $14.16 billion. Adjusted for inflation, giving to the environment/animals subsector increased 9.4 percent. This marks the category’s sixth consecutive year of growth.

What was given, by source type:

↑ Giving by individuals totaled an estimated $309.66 billion, rising 4.7 percent in 2019 (an increase of 2.8 percent, adjusted for inflation). Giving by individuals achieved the second-highest total dollar amount on record, adjusted for inflation, and was less than 70 percent of total giving for only the second time.

↑ Giving by foundations increased 2.5 percent, to an estimated $75.69 billion in 2019 (a flat growth rate of 0.7 percent, adjusted for inflation), reaching its highest-ever dollar amount. Giving by foundations has grown in nine of the last 10 years, and represented 17 percent of total giving for the second year in a row, the largest share on record. Data on giving by foundations are provided by Candid.

= Giving by bequest was an estimated $43.21 billion in 2019, and was essentially flat with a growth rate of 0.2 percent from 2018 (a decline of 1.6 percent, adjusted for inflation). Giving by bequest often fluctuates substantially from year to year.

↑ Giving by corporations is estimated to have increased by 13.4 percent in 2019, totaling $21.09 billion (an increase of 11.4 percent, adjusted for inflation). This significant growth is indicative of this type of giving, which is highly responsive to changes in corporate pre-tax profits and GDP, and its year-over-year trend lines tend to be more turbulent as a result.

Last year, we concluded our analysis of the Giving USA report noting that “nonprofits should consider how to work countercyclically to build and engage their donor bases differently and with a sense that their future sustainability and independence depends upon it—because they do.” It is a little scary how correct that statement proved to be, even if it came true in a way that we would have never anticipated.

Now more than ever, nonprofits and philanthropy must come together to encourage broader giving. They must do this, not because nonprofit programs and organizations are stake, although certainly too many nonprofits face existential challenges today—but because the ability of nonprofits to be representatives of a broad civil society is itself at risk. Ultimately, the nonprofit sector and philanthropy rely on maintaining broad public support for their existence, and certainly for the stature they enjoy today. We break this bond of sacred trust with the public at our own extreme peril.