Charitable giving fell last year after two years of record-breaking generosity.

Could this be a sign of economic trouble to come? It could be if stock market turbulence and uncertainty about the economy continue in 2023.

Individuals, bequests, foundations, and corporations gave $499.33 billion to U.S. charities according to new data released in the annual Giving USA report.

Charitable giving declined -3.5% in current dollars but when adjusted for inflation, it fell a whopping -10.5%. Here is yet another example of inflation eroding the power of our money.

The Facts

Here are selected data on giving by source and giving to specific categories:

Sources of giving:

  • Individuals – $319.04 billion, declining -6.4% or -13.4% adjusted for inflation 
  • Foundations – $105.21 billion, growing 2.5% but declining -5.0% adjusted for inflation
  • Bequest – $45.6 billion, growing by 2.3% but declining -5.3% adjusted for inflation
  • Corporations – $29.48 billion, increasing by 3.4% but declining -4.2% adjusted for inflation

Recipients of giving:

  • Religion – $143.57 billion, growing 5.2% but declining by -2.6% adjusted for inflation
  • Human services – $71.98 billion, declining -0.6% or -8.0% adjusted for inflation
  • Education – $70.07 billion, declining -3.6% or -10.7% adjusted for inflation
  • Foundations – $56.84 billion, increasing 10.1% or 1.9% adjusted for inflation
  • Health – $51.08 billion, growing 5.1% but declining -2.6% adjusted for inflation
  • Public-society benefit organizations – $46.86 billion, decreasing -8.4% or -15.2% adjusted for inflation
  • International affairs – $33.71 billion, growing 10.9% or 2.7% adjusted for inflation
  • Arts, culture, and humanities – $24.67 billion, increasing 2.9% but declining -8.9% adjusted for inflation
  • Environmental and animal organizations – $16.10 billion, decreasing -1.6% or -8.9% adjusted for inflation

Nearly all recipients of gifts experienced inflation-adjusted declines in giving which underscores just how damaging elevated inflation has been to charitable giving. 

Inflation robs charities forcing them to do more with the same amount they received in the past.

Why it matters

The 2022 decline in total giving is a stark turnaround from 2021 when Americans’ giving surpassed $500 billion for the first time on record. 

Every year over the past 40 years, total giving has increased except for 1987, 2008, and 2009–all years when the stock market crashed.

When giving is tied to stock market performance, we can expect this decline in donations. However, experts think giving could have been worse.

Josh Birkholz, chairman of the Giving USA Foundation, which publishes the report, told the Associated Press:

I go back and forth on whether it’s encouraging or discouraging. There was a 20 to 25% decline in the stock market and an 8% inflation rate, but Americans still gave nearly a half trillion dollars.

Charitable giving benefits the organizations and causes that receive the gifts. When Americans pull back on their giving, charities and the people those organizations serve suffer. 

As I’ve written, over the past two years charities have faced high prices on goods, services, and labor even as demands for help increased. High inflation erodes charitable giving power just as it erodes purchasing power. However, sustained charitable giving served as a buffer against inflation.

Recognizing the great needs sparked by the pandemic and high inflation, in 2020 and 2021 individuals, foundations, and corporations dug deeper into their pocketbooks to help their neighbors and communities despite battling inflation themselves.

Soup kitchens, food pantries, and shelters experienced increased needs from families who previously did not need help. Increased and sustained giving to direct service providers helped them to meet those needs.

Bottom Line

if market conditions do not improve, charitable giving may continue to decline and push our country’s most vulnerable people further behind.