CHARITABLE GIVING DIPPED IN 2018

By June 19, 2019 Blog

Amid a complex climate for charitable giving, American individuals, bequests, foundations and corporations gave an estimated $427.71 billion to U.S. charities in 2018, according to Giving USA 2019: The Annual Report on Philanthropy for theYear 2018.

Adjusted for inflation, total giving declined 1.7%. Total charitable giving rose 0.7% measured in current dollars over the revised total of $424.74 billion contributed in 2017.

Giving USA, the longest-running and most comprehensive report of its kind in America, is published by Giving USA Foundation, a public service initiative of The Giving Institute. It is researched and written by the Indiana University Lilly Family School of Philanthropy at IUPUI.

“After reaching record-breaking levels of giving in 2017, American individuals and organizations continued their generous support of charitable institutions in 2018,” said Rick Dunham, chair of Giving USA Foundation and CEO of Dunham + Company. “However, the environment for giving in 2018 was far more complex than most years, with shifts in tax policy and the volatility of the stock market. This is particularly true for the wide range of households that comprise individual giving and provide over two-thirds of all giving.”

A number of competing factors in the economic and public policy environments may have affected donors’ decisions in 2018, shifting some previous giving patterns. Many economic variables that shape giving, such as personal income, had relatively strong growth, while the stock market decline in late 2018 may have had a dampening effect. The policy environment also likely influenced some donors’ behavior. One important shift in the 2018 giving landscape is the drop in the number of individuals and households who itemize various types of deductions on their tax returns. This shift came in response to the federal tax policy change that doubled the standard deduction. More than 45 million households itemized deductions in 2016. Numerous studies suggest that number may have dropped to approximately 16 to 20 million households in 2018, reducing an incentive for charitable giving.

“The complexity of the charitable giving climate in 2018 contributed to uneven growth among different segments of the philanthropic sector. Growth in total giving was virtually flat. Contributions from individuals and their bequests were not as strong as in 2017, while giving by foundations and corporations experienced healthy growth,” said Amir Pasic, Ph.D., the Eugene Tempel Dean of the Lilly Family School of Philanthropy. “Charitable giving is multi- dimensional, however, and it is challenging to disentangle the degree to which each factor may have had an impact. With many donors experiencing new circumstances for their giving, it may be some time before the philanthropic sector can more fully understand how donor behavior changed in response to these forces and timing.”

The overall U.S. economy was relatively strong in 2018, lifted by the robust performance of many of the economic factors that affect giving, such as a 5.0% increase in disposable personal income and 5.2% growth in the GDP, both in current dollars. Giving by foundations and giving by corporations were buoyed by the strong run of the stock market in the past few years. Individual giving declined.

“As we’ve seen in previous years, the strong economy had a positive influence on individual giving; however, these positive effects may have been tempered by policy changes and other factors to create a more mixed picture for giving in 2018. About half of all Americans give, and the tax policy changes may have created uncertainty for some donors, especially those who previously itemized but no longer will,” said Una Osili, Ph.D., associate dean for research and international programs at the Lilly Family School of Philanthropy. “We have strong historical data about the link between economic variables, the stock market and charitable giving, and we will be analyzing data for the next few years to better understand how broad giving patterns may have changed.”

The complete report can be found here.

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