According to a report released Tuesday that provides a comprehensive look at American philanthropy, charitable giving in the United States reached a record $485 billion in 2021, though the increase did not keep pace with inflation.
According to the Giving USA report, donations in 2021 will be 4% higher than the record-breaking $466 billion contributed in 2020. However, when adjusted for inflation, they were down 0.7 percent.
According to Laura MacDonald, chair of the Giving USA Foundation, many nonprofits are feeling the strain because giving is not growing at the same rate as price increases. Giving increased in unusual ways in 2020 in response to the intense needs of the early COVID-19 pandemic, as well as calls for racial justice, but has generally returned to previous patterns.
“In 2021, many donors returned to their favored causes, with many of the sectors that struggled in 2020 making a recovery in 2021,” MacDonald said in a statement.
Individual giving totaled less than 70% of total giving in 2021 for the fourth year in a row, and the report found that giving from individuals was essentially flat in 2021 when adjusted for inflation, up 4.9 percent to $327 billion. That is still a long way from the peak of $335 billion in 2017 when adjusted for inflation. According to experts, these figures contradict the claims made by supporters of the Tax Cuts and Jobs Act, which was passed in 2017.
“Everyday households are not giving as much as they were a decade or two ago, “In an interview, MacDonald stated. “That is concerning. That’s concerning.”
She mentioned that some large donors have switched to giving through donor-advised funds, a type of charitable investment account, or family foundations, and that those contributions would be counted in different categories.
Giving to arts and culture organizations, which suffered during the pandemic, increased 27.5 percent to more than $23.5 billion in 2021. Giving to education, on the other hand, fell 2.8 percent to $71 billion. It had risen in 2020, thanks in part to vaccine donations to university-affiliated hospitals and research.
“The giving environment is evolving in a variety of ways,” said Amir Pasic, dean of Indiana University’s Lilly Family School of Philanthropy, which researched and wrote the Giving USA Foundation report. “Robust economic growth translated to strong performance by institutional forms of philanthropy such as foundations and corporations.”
Corporate giving has also raised concerns. Though it increased 23.8 percent to $21 billion in 2021, it did so during a year when corporate profits increased 37 percent before taxes. According to the report, corporate giving still accounts for less than 1% of pre-tax profits.
However, according to the report, donations are generally strong. Giving increased or remained stable in eight of the nine major philanthropic sectors, with education the only exception.
“The growth we see in the majority of subsectors in 2021 is a reminder of the resilience and innovation that help drive the philanthropic sector,” said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy.
Giving to public benefit organizations, which include civil rights and voting groups as well as donor advised funds, increased by 23.5 percent in 2021 over the previous year, according to the report.
“Many of those organizations, such as civil rights groups, gained a lot of visibility and momentum following the killing of George Floyd in 2020, and many of the new events that happened in 2021, such as the Stop Asian Hate Movement, also garnered a lot of support,” Osili said.
The report uses multiple data sets, including tax information, but it does not include person-to-person giving through crowdfunding campaigns or mutual aid groups, though it does include crowdsourced donations to nonprofits. Previous research by the Lilly Family School found that person to person giving is not yet replacing donations to charitable organizations, Osili said, but rather is in addition to those gifts.