Charitable giving in the 2022 holiday season is likely to see the same dip due to economic uncertainty as other for-profit sectors, with some reports finding that consumers are spending less this year on holiday shopping due to ongoing inflation.
But one expert says even with inflation and the threat of a recession looming, Americans will still open up their pocketbooks for good causes.
Dr. Bill Stanczykiewicz, with the IU Lilly School of Philanthropy at IUPUI. (Photo from IU Lilly School of Philanthropy at IUPUI)
Dr. Bill Stanczykiewicz teaches fundraising at the Lilly Family School of Philanthropy on the Indiana University-Purdue University Indianapolis campus and previously led the Indiana Youth Institute for 17 years as its president and CEO.
“The holiday season is an important timeframe because about 40% of charitable giving occurs in the final two months of the calendar year. A lot of nonprofits depend heavily on these final two months for their annual budgets,” Stanczykiewicz said. “Charitable giving, on average, only goes down by about one half of 1% after adjusting for inflation during a recession… It’s important to know that charitable giving does not necessarily crater just because the economy slows down.”
Rosier outlook might quell economic anxiety
Stanczykiewicz did warn that all recessions are different, noting that during the 2008 Great Recession charitable giving fell by 5%.
But unlike that recession, unemployment remains low and the nation’s gross domestic product is still up, potentially alleviating concerns and boosting spirits in the upcoming weeks.
When confronted with uncertainty, donors are likely to stick to the nonprofits they already know and have supported in the past, Stanczykiewicz said.
“(Donors) want to kick the tires and know that the nonprofit is trustworthy and reliable,” Stanczykiewicz said.
A charitable giving report from earlier this year, published by the Giving USA Foundation and researched by the Lilly Family School of Philanthropy at IUPUI, found that giving exceeded 2020 totals, netting nearly $484 billion in 2021.
“Americans continued giving more generously than before the pandemic. However, the growth in giving did not keep pace with inflation, causing challenges for many nonprofits,” Laura MacDonald, the chair of Giving USA, said in a release.
The $484.9 billion reaped in 2021 was a 4% increase from 2020’s $466.2 billion, but giving overall actually fell by 0.7% when adjusted for inflation.
Hoosiers generosity doesn’t extend to funding
But some analysis suggests that Hoosiers aren’t as inclined to charitable giving as other states.
Consumer-oriented WalletHub ranked Indiana as the 30th most charitable state, but only because Indiana scored higher than most states in terms of volunteerism and service, clinching the 16th slot, while its charitable giving alone came in at 45th.
A 2019 analysis from AmeriCorps, which collected data over 15 years, reported that just over one-third of Hoosiers volunteered annually, or 34.9%, putting the state in the top 20. Volunteering in the Indianapolis-Carmel-Anderson metropolitan area was even higher, coming in at 43.4% and ranking as the 6th-highest city for volunteerism.
The organization also reported that over half of Indiana’s residents, 54.5%, donate $25 or more to charity each year.
WalletHub’s methodology differed from AmeriCorps by also incorporating the share of income donated, food banks per capita, charities per capita and the share of sheltered homeless.
However, WalletHub did rank Indiana second-highest in terms of the percentage of the population who volunteered to collect and distribute food but didn’t include a breakdown with numbers.
Indeed, Stanczykiewicz suggested that nonprofits find other ways for donors to help their organizations in the face of economic uncertainty. For instance, someone might be more inclined to volunteer than give money when the budget is tight.
“While economic uncertainty might affect how much money somebody can give, the economic uncertainty never affects how generous somebody is,” Stanczykiewicz said. “People don’t become less generous, they might just not have as much money to donate or might not be able to donate this year. And that’s important for nonprofits to remember.”