Report Reveals Increasingly Complex Charitable Giving Landscape Following Great Recession
Average amount given per donor household remained constant post-recession, while total share of households who give decreased
A new report published by the Indiana University Lilly Family School of Philanthropy at IUPUI and funded by a grant from The Vanguard Charitable Philanthropic Impact Fund analyzes effects of the 2008 Great Recession on charitable giving across various donor demographic groups and examines differences pre- and post-recession. The report offers key insights for nonprofits and donors as they face new and evolving factors affecting the philanthropic sector in the United States.
Changes to the Giving Landscape finds that the average amount given by donor households remained relatively constant over time, despite the economic downturn. However, the recession fueled a 13-percentage point decrease in the share of U.S. households who gave to charity between 2000 and 2016. This decline in the overall share of households who gave represents 20 million fewer donor households. The report also examines in depth the percent of income households gave.
“The study shows continued attrition in the percent of American households who gave to charity, from about two-thirds in 2000 to just over half in 2016. At the same time, the households who gave maintained or slightly increased the amount of their giving, on average. These results present both challenges and opportunities for nonprofit organizations and the donors who care about and support them,” said Una Osili, Ph.D., Associate Dean for Research and International Programs at the Lilly Family School of Philanthropy. “Additionally, as one of the first studies to examine in detail the percent of income various types of households gave, the report also provides new insights into which households increased the share of income they gave, and which held steady or decreased.”
When examining donor households only, there were no statistically significant changes in their percent of income given overall or to secular or religious organizations from before to after the Great Recession. When all households were analyzed by subgroups, declines in the percent of income given were only significant in households led by individuals with less than a high school education, under $50,000 in income, and/or under $50,000 in wealth.
The report details actionable insights for nonprofits and donors on the opportunities and challenges facing the future of philanthropy following the Great Recession. Most notably, the findings reveal that even during economic downturns, a majority of donors continue to give and nonprofits can continue raising funds.
“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,” said Jane Greenfield, President of Vanguard Charitable. “In the face of evolving giving patterns, macroeconomic volatility, shifting demographics, and the proliferation of new fundraising 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.”
According to the report’s findings, donor households headed by older generations continued to contribute a larger share of their income to charitable causes. In the years following the Great Recession, Greatest Generation (born between 1910 and 1924) donor households contributed 8.8% of their income; in contrast, Millennial households contributed 0.9% of their income.
Although the economic downturn impacted Millennials’ giving behaviors in the early part of their adult lives, nonprofits and donors can work to engage and encourage their support of organizations and causes that are important to them through the adoption of new technologies and models of engagement. For example, online donations, which currently constitute 8% of all giving, are one such tool.
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. Impact investing and cause marketing are creating new channels for fundraising 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.
These and other opportunities are available to philanthropic organizations as they navigate new challenges and opportunities in securing charitable giving to carry out their missions. Emerging factors such as the 2017 Tax Cuts and Jobs Act’s increase to the annual standard tax deduction (which reduces tax incentives for giving for some households), as well as new crowdfunding tools, and myriad other changes in the philanthropic environment, impact how donors approach giving and how organizations approach fundraising. The report offers additional details on the implications of the Great Recession and these evolving factors for the charitable giving landscape going forward.
About the Report
The empirical analysis in this paper draws on a unique longitudinal data source – the Lilly Family School of Philanthropy’s Philanthropy Panel Study (PPS), a module within the University of Michigan’s Panel Study of Income Dynamics (PSID). The PPS tracks the same 9,000+ families’ charitable giving biennially.
The PPS is the best resource for measuring charitable giving and volunteering by the general U.S. population, accurately representing households up to the 97th percentile of income and closely mirroring results from the U.S. Census Bureau for all other socio-demographic variables. To ensure that the sample remains representative, refresher samples of respondents have been added over time. The data allow us to examine the influence of economic and demographic factors on generosity.
The PPS is the only existing longitudinal dataset on philanthropy based on a nationally representative sample of U.S. households. To date, it is a critical resource illuminating how demographic shifts may influence generosity trends across generations now and in the future.
(Press release courtesy of the Lilly Family School of Philanthropy)