The percentage of households donating to charity has dropped dramatically since the 2008 Great Recession, according to a new report by the Lilly Family School of Philanthropy at Indiana University.
The recession fueled a 13-percentage-point decrease in the share of U.S. households that gave to charity between 2000 and 2016. This decline in the overall share of households that gave represents 20 million fewer donor households, according to the report, “Changes to the Giving Landscape,” released Tuesday. The drop was fueled by the recession and a decline in donations from middle- and lower-income households, said the report, which was funded by the Vanguard Charitable Philanthropic Impact Fund.
However, the recession did not hurt giving as much as might be expected, the report said. The average amount donated by households remained relatively steady at 2% of total income, and the total amount given annually increased by $100 billion from 2000 to 2016.
“There are several reasons the number of donor households declined, especially for middle- and lower-income households,” said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy, in an interview with Financial Advisor. The 2008 recession caused some to stop giving, as did a decline in religious participation. “When people stop giving to a religion, they do not replace it with another charity,” she said.
That decline might have been exacerbated, she said, by changes in the tax law, specifically the increase in the standard itemization rate that came about with the 2017 Tax Cuts and Jobs Act. “But we call this ‘donor down, dollars up.’ Those who are giving are committed to philanthropy. Generosity is a core value for Americans.”
Charities are learning how to engage younger Americans, how to reach donors, how to segment their donor bases and how to use new technology, she said. “Our study shows philanthropy is more complex than it used to be.”
Jane Greenfield, president of Vanguard Charitable, added in a statement, “In the years since the Great Recession, many donors have exhibited tremendous resilience in supporting the causes that they care about during a period of prolonged economic uncertainty. In the face of evolving giving patterns, macroeconomic volatility, shifting demographics and the proliferation of new fund-raising technologies, this report reveals relationships still rule the day. Finding ways to create meaningful engagement with donor communities remains key to sustaining existing donations and inspiring new generations to give.”
The report showed some differences in donor groups.
Older generations contributed a larger share of their income to charitable causes. In the years following the Great Recession, the Greatest Generation, those born between 1910 and 1924, contributed 8.8% of their income. In contrast, millennial households contributed 0.9% of their income, the report said.
“The proliferation of new ways to give and charitable giving vehicles present the opportunity to innovate and test new models to attract younger donors and to re-engage donors across different backgrounds,” the report said. “Impact investing and cause marketing are creating new channels for fund-raising professionals and donors to create impact. Vehicles such as crowdfunding and donor-advised funds have gained popularity for their potential to reach younger audiences and people who have not previously given.”
To make the most of their donations, donors need to have a plan. “Just like they have an investing plan, they should have a giving plan so that they can give more intentionally,” Osili said.