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.