The pandemic prompted people to reach deeper into their pockets to help those in need—a trend that is likely to continue into 2022, according to a number of people immersed in the world of philanthropy.

Next year also will probably see gifts continue to flow to more localized charities with missions to feed the hungry, house the homeless and address racial issues, trends that established themselves in 2020.

“The commitment to give is not dropping off for our clients, it is actually growing. Equally inspirational is that we have seen people giving to more organizations. More than half of our donors are giving to a new charity that they had not focused on before,” while maintaining their support for the causes they gave to in the past, says Fred Kaynor, managing director, marketing, business development and strategic partnerships at Schwab Charitable. “People want to do more with their giving. We have seen a striking trend away from specificity to more nonrestrictive giving, and at the same time we have seen charities change the way they approach donors.”

Crystal Thompkins, head of philanthropic solutions at BNY Mellon Wealth Management, agrees, “People are now more focused on impactful giving. Instead of giving in multiple areas, they are focusing on areas where they really want to make a difference. Charities are doing a better job of connecting with donors and setting metrics so they can be held accountable” and donors see what their money is accomplishing. “That has fueled even more giving.”

Charities are doing a better job of recruiting philanthropists by being more transparent with what they are doing with donations. Because charities are getting better at explaining what their benefactors’ money is being used for, more donors are giving unrestricted gifts, which makes it easier for the charities to plan for the future.

“More transparency on the part of the charities has encouraged donors to give more unrestricted gifts to the organizations,” Thompkins says.

Advisors can take advantage of these trends to help clients focus their giving.

“This is a huge opportunity for advisors to really connect with their clients whose interest in giving is growing” as the needs grow, says Jackie VanderBrug, head of sustainable and impact investment strategy for Bank of America Private Bank. “Recent events have raised people’s awareness of social issues that need addressing,” in addition to the pandemic bringing growing attention to the needs of others. 

According to a recent Bank of America study, “2021 Philanthropy and Sustainability,” which included more than 1,600 affluent people, there is a strong connection between impact investing and charitable giving. Fifty-nine percent of those who invest for impact or sustainability do so in addition to—not in lieu of—their charitable giving, the study says. With the increase is a growing awareness of social and racial issues. Nearly one in five affluent households gave in support of social and racial justice causes in 2020, and 19% said they want to know more about how to support this area, the study says. The study participants had at least $200,000 in annual income or $1 million in net worth, excluding their primary residence.

Charitable giving in the United States continues to grow each year and 2020 was no exception, according to the Giving USA report compiled by the Lilly Family School of Philanthropy at Indiana University.

Giving in the United States rose 5.1% between 2019 and 2020 to $471.44 billion in contributions. The increase reflects positive or equal growth in giving to seven of the nine major recipient subsectors tracked by the report.

At the same time, monetary gifts rose in most areas. For instance, giving by foundations increased by 17% during 2020, according to a Lilly Family School of Philanthropy study. Giving by bequests grew more than 10%. Only giving by corporations saw a decline of 6% in 2020. Giving in most areas increased. For instance, philanthropists contributed 9.7% more to human services causes and 9% more to education in 2020.

Budgeting plays a part in charitable giving, according to a Vanguard Charitable study released in November. While only 44% of Americans donated to charity in the past 12 months, those who included charity in their annual budget gave nearly seven times more dollars than those who did not budget at all, says the online study that included 2,075 adults. Nearly four in 10 Americans who include charitable donations in their annual budget increased giving in the past 12 months, while for those who gave who did not have a budget, only 19% said giving increased in the past 12 months. Younger Americans and those approaching retirement age are more likely to have a charitable donation budget.

The affluent represented in the Bank of America study especially showed their desire to do more. The vast majority of affluent Americans, nearly 90%, gave to charity in 2020. And nearly half donated to charitable organizations or financially supported individuals or businesses in direct response to the pandemic, the Bank of America study says. Several distinct giving trends related to the pandemic were revealed in the study. There was an increase in support for local community needs, an increase in unrestricted gifts to a variety of nonprofit organizations and an increase in virtual interactions between nonprofits and donors.

In particular, “the affluent are increasingly using their resources in multiple ways. At the same time that they are supporting charities, they also are saying corporations must do more than just make money,” says Dianne Bailey, national philanthropy strategy executive at Bank of America Private Bank.

“Currently, there is a better understanding that there is a need for flexible, unrestricted giving,” says Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy. “Gift sizes have gone up even in a time of economic hardship. We have seen a shift to social and racial justice issues: That is part of what we have been seeing for a while now, but people are also giving to causes rather than organizations.

“Advisors can help clients identify what their priorities are and align their legacy bequests with their goals. They can be helpful in connecting clients to their missions,” she adds. Philanthropists are more fulfilled when they are engaged with more than just donations of money” and advisors can help make those connections. Volunteering did not fall as much as might be anticipated during Covid.

“It is too early to know for sure if these are long-term trends,” Osili says. However, “innovative forms of giving are being embraced by a diverse donor population whose influence, expectations and priorities are expanding traditional notions of philanthropy. Financially empowered and technology-enabled, these affluent donors are looking to deepen their impact, using a range of tools and vehicles available to them to advance the issues they are passionate about.”

Technology and cryptocurrency also are fueling philanthropy, according to Fidelity Charitable. Investing in cryptocurrency and giving to charity go hand in hand, according to a study by Fidelity Charitable, “Cryptocurrency and Philanthropy,” released in October. Forty-five percent of cryptocurrency investors donated $1,000 or more to charity in 2020, compared with 33% of all investors. Fidelity Charitable said the reasons may be that millennials, who are more comfortable investing in cryptocurrencies, are also more inclined to give money to charity than other generations.

Another trend that is growing in popularity is direct digital giving, according to the Bank of America study. More than half of contributors in the study gave through a nonprofit’s website in 2020 and one in five used digital tools such as GoFundMe and other crowdfunding platforms and 17% used payment processing apps such as Zelle and Venmo.

Philanthropic planning is also a key to success for advisors, according to Fidelity Charitable. Financial advisors who include charitable giving in their practices are more successful than those who do not. Planning for charitable giving helps advisors grow their practices, brings in more revenue and makes clients more likely to refer them to others, Fidelity Charitable says in a study, “On the Leading Edge: Accelerating Firm Growth with Charitable Planning.”

“It is critical that financial advisors not only be part of the decision-making (for charitable giving), but they should initiate the conversation with their clients. Charitable planning opens the door for advisors to reinforce the breadth of their wealth management expertise and build stronger client relationships and more holistic financial plans,” Fidelity Charitable says. “In many cases, charitable planning is a key strategy used to deliver on a firm’s objective of providing holistic wealth management.”

Philanthropists are committing to giving more in appreciated assets, rather than cash, as they realize the tax advantages to themselves and the fact that they then have more value to give to their favorite causes, says G. David Phelps Hamar, managing director and head of wealth advisory services and family office services at Chilton Trust, an independent, privately owned, wealth management company providing wealth management services to high-net-worth individuals, families, foundations, endowments and institutions, based in New York City.

While the world was uncertain at the beginning of the pandemic, giving slowed. “But as soon as the Federal Reserve Board acted and the presidential administration acted, we saw giving speed up and increase. People were looking for new ways to give. For high-net-worth individuals and families, there is a little more strategic thinking and more forward thinking, than for the mass affluent. The wealthy want to create a legacy,” Hamar says. “As soon as people saw the market was not going into a major meltdown,” they stepped up their giving, he says.