The dip in 2018 was just the 13th inflation-adjusted decline in the past four decades. It could be a sign of trouble ahead. However, it is much milder than the drop during the Great Recession, when giving slid 7.2 percent in 2008 and 8 percent in 2009.
Historically, individuals have provided at least 70 percent of overall giving, but in 2018 they gave just 68 percent. In recent years, “megagifts” have made up for the loss of household contributions, said Laura MacDonald, vice chair of the Giving USA Foundation and principal at the Benefactor Group. But not in 2018.
Donations from individuals have continued to fall this year, according to the Fundraising Effectiveness Project. In the first quarter of 2019, the number of donors shrank by nearly 6 percent, while overall contributions decreased just over 2 percent.
How to boost giving in a down year.
Giving to foundations plunged 9.1%. As with individual giving, the decline may have been driven by the weak stock market in 2018. However, contributions to foundations are much more volatile year-to-year than any other category and have averaged 7 percent annual growth over the past 40 years.
The impact of the tax law remains uncertain. About a third of all U.S. households filed itemized tax returns in 2017 and therefore had access to the charitable deduction. That percentage fell to just 12 percent in 2018 because the new tax law nearly doubled the standard deduction.
The last time Congress enacted a major tax overhaul, in 1986, giving fell the following year but then recovered. Patrick Rooney, an economist at Indiana University, said he doesn’t think the 2018 decline is a blip. “The itemization effects are long-lasting,” he said.
The impact of the tax law on corporate giving also is unknown. Corporate giving rose 2.9 percent last year. For the last 20 years, it has hovered around 1 percent of corporate pretax profits. That trend continued in 2018, despite the financial gains companies saw as a result of the new tax law.
Ben Soskis, a historian and researcher at the Urban Institute’s Center on Nonprofits and Philanthropy, noted that one of the arguments in favor of a lower corporate tax rate was that it would boost corporate giving. After getting the big tax cut they wanted, corporations should have done better in 2018, Soskis said. “I don’t think it’s ideal for us to grant more subsidies to corporations and then celebrate them for giving a small percentage back to charity.”
Shifts in Giving Patterns
Some causes benefit from generational changes and a Trump bump. Giving to international-affairs groups rose an estimated 7 percent, to $22.9 billion, while donations to environmental and animal organizations increased 1.2 percent, to $12.7 billion.
Una Osili, who oversees “Giving USA” research at the Lilly Family School of Philanthropy, says the change is likely generational. Millennials, who are becoming a more significant part of the donor pool, are more likely to support environmental and international groups than older Americans are.
Others cited a reaction to Trump’s policies. Scott Groene, executive director of the Southern Utah Wilderness Alliance, said gifts from individuals have “certainly increased since Trump was elected, as has our membership. And although we’re watching to see a fatigue with Trump, we have not seen that yet.”
Giving to religion continues its long decline. Contributions to congregations and other religious groups, which account for 30 percent of charitable giving, declined nearly 4 percent, to $124.5 billion. Religion used to account for nearly half of donations. But as fewer Americans attend services and are affiliated with religious institutions, gifts have dropped. Religious giving matters over all because people who give to faith organizations typically give more to other causes, research has shown.
Nonprofits increasingly rely on foundations for funding. Grant making rose 4.7 percent in 2018, making foundations an increasingly important source of funding for charities. Foundations now make up 18 percent of all giving, up from 14 percent in 2008.
