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Giving Grew in a Tumultuous Year but Not for All. What’s Ahead in 2021?

The story of philanthropic giving in 2020 is as complex as the year itself, which saw a global pandemic upturn daily life, prolonged but uneven economic fallout, and renewed attention to civil rights and racial justice

Over all, 2020 was a banner year for charitable giving in the United States, which rose to $471.4 billion, according to estimates from the latest “Giving USA” report. That’s a 3.8 percent increase over estimated giving in 2019.

In the face of economic upheaval, it was uncertain how charitable giving would be affected and whether past crises would provide a road map. Many Americans were able to hold onto their jobs and had resources to give; many wealthy donors became wealthier. But others found themselves unemployed and couldn’t make charitable contributions.

“For a segment of the population, personal savings were up, incomes were stable, but the economic picture was very, very turbulent,” said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy at Indiana University, which produces the annual “Giving USA” report. “There was a lot of generosity, and those that had the means did step up. But not everybody was in a position to give.”

The fact that giving grew in a year with a recession is notable. In the last recession, in 2008 and 2009, giving declined significantly as the economy contracted. The gross domestic product shrank by 3.5 percent from 2019 to 2020. Total giving last year was a record 2.3 percent of the $20.9 trillion U.S. gross domestic product. (The Chronicle is using “Giving USA’s” inflation-adjusted numbers throughout this article.)

Early fears that charitable assets would be hit hard by a declining stock market eased as the year went on. Despite a plunge in March, markets rebounded rapidly. By the end of the year, the S&P 500 had gained roughly 15 percent.

Giving by living individuals increased just 1 percent year-over-year but shrank to its smallest share of overall giving in “Giving USA” history, continuing a long-developing trend. Bequests increased 9 percent. Giving by corporations declined the most, dropping roughly 7 percent from 2019 to 2020, according to the estimate, which is based on economic modeling.

“The factors that we know impact giving continue to impact giving,” said Anna Pruitt, managing editor of the “Giving USA” report. “The health of the stock market and the state of the economy, legislation and tax policy, and unforeseen events and circumstances — all of those things continue to impact charitable giving. The stronger economy is the thing that’s really lifting giving.”

Here are some highlights from the report and analysis of what they mean for nonprofits in the year ahead.

Giving by individuals increased, albeit modestly.

In a year with examples of great generosity, such as MacKenzie Scott’s nearly $6 billion in charitable donations, why did individual giving increase just 1 percent over 2019?

Individual giving grew from $320.9 billion in 2019 to $324.1 billion in 2020. That amounted to 68.8 percent of all philanthropy, according to “Giving USA” estimates. For that reason, even billions more in giving translates to only a small percentage increase, said Laura MacDonald, chair of the Giving USA Foundation.

If you take MacKenzie Scott’s contributions out of the equation, individual giving would have decreased by nearly 0.8 percent.

The 14 biggest gifts alone accounted for more than $12.2 billion in giving last year, although some of those were channeled through foundations.

Small-dollar donors had new tax incentives to give in 2020, thanks to the universal charitable deduction, which gave rank-and-file taxpayers access to a charitable deduction for up to $300 in donations ($600 for couples). But experts say more data is needed to understand how much giving that policy inspired.

Over all, the federal government’s actions, including elements of the Cares Act such as the Paycheck Protection Program and stimulus checks, had a more significant impact on helping households and businesses stay afloat, Osili said.

“The Cares Act played a pivotal role in the overall recovery of the American economy and where we are now,” she said. “That’s a bigger deal than just the universal deduction.”

Many fundraisers say their organizations were supported by new donors as well as loyal givers who contributed more than in past years.

According to the Fundraising Effectiveness Project, the overall number of donors grew by 7.3 percent over 2019, buoyed by a large increase in donors giving small amounts. (“Giving USA” does not track the number of donors who gave.) The Fundraising Effectiveness Project report, which analyzes giving details from 2,496 nonprofit organizations based in the United States that raise $100,000 to $10 million annually, found overall giving increased by 10.6 percent.

American Jewish World Service, a global human-rights organization working to end poverty in Africa, Asia, the Caribbean, and Latin America, finished its last fiscal year about 9 percent ahead of its fundraising goal, driven largely by increased support from major donors.

“Nobody could have predicted that at the higher end of the file people just got so much richer,” said Margo Bloom, the group’s vice president for development.

The charity has 480 donors who give at least $10,000. Since the pandemic began, around 175 of those supporters have increased their giving. About 40 donors gave a major gift for the first time.

That generosity has continued into this year. Donors gave $1 million to support the group’s work in India as Covid-19 cases spiked in the country.

“Our work became more relevant than ever this year,” Bloom said of the global Covid-19 crisis. International charities as a group saw an increase in giving last year. But as the pandemic wanes in the United States and continues to spread in countries abroad, she and her fundraising colleagues expect their work to look more like traditional disaster fundraising.

“If it’s not on the front pages of the Times, it’s harder to raise money for,” Bloom said. ”That doesn’t mean we won’t be out there raising money.”

Corporate giving declined, especially among industries hit hard by the pandemic.

Giving by corporations declined 7.3 percent from 2019 to $16.9 billion in 2020. That represents just 4 percent of last year’s total giving.

Corporate giving is highly responsive to changes in businesses’ pre-tax profits and gross domestic product, both of which declined last year. Corporate giving represented 0.8 percent of corporate pre-tax profits, a ratio that has remained relatively steady over the past decade.

Some of the decline can be attributed to the economy’s mixed impact on corporations, Osili said. Transportation, retail, and hospitality were hard hit while technology and financial services had extraordinary years.

In addition, many of the biggest corporate gifts that drew headlines in 2020 were multiyear commitments and pledges that included impact investing or programs like support for small businesses, which are not captured by “Giving USA.”

“Corporate giving is tough in an environment of uncertainty,” said Russell James, a professor of charitable financial planning at Texas Tech University who also sits on Giving USA’s methodology committee. “In an environment of uncertainty, you get a lot more of ‘Well, we need to take care of our own people first.’”

Chief Executives for Corporate Purpose, a group that tracks the giving of large companies with revenues of at least $2 billion, reports that 2020 giving by those businesses increased by 41 percent over 2018 levels. There were a few exceptions, such as businesses that deal with consumer staples, which gave less in 2020 than in past years.

André Solórzano, senior manager of data insights, said it wouldn’t surprise him if smaller companies saw contributions go downhill. Large companies often have budgets committed far ahead of time, he said. In addition, “economies of scale allow large companies to buffer shocks better than small companies.”

Carolyn Berkowitz, president and CEO of the Association of Corporate Citizenship Professionals, said few of her members plan to decrease their corporate grant-making budgets this year.

The group represents a range of businesses across the country. In a recent survey conducted by the association and Rocket Social Impact, just 14 percent of executives at 100 member companies said they planned to decrease their grant-making budgets in 2021. Thirty-six percent expected their grant-making budgets to stay the same,’ and 47 percent expected them to increase.

The survey also asked executives if the crises of 2020 led to changes in the causes their corporate foundations support. Seventy-one percent said they made a short-term change to support hunger issues in their community in 2020. In the longer term, 64 percent said racial justice and equity was a new area of focus that would continue.

Giving from foundations increased significantly.

The strong performance of the stock market in the second half of the year had a big influence on foundation payout rates, Osili said.

Giving from foundations surged 15.6 percent to $88.5 billion in 2020. Those contributions represented nearly 19 percent of all charitable giving.

Last year also brought public pressure campaigns urging foundations to increase payout, give unrestricted support, and loosen reporting requirements. Many foundations committed to making those changes, with more than 800 signing on to a Council on Foundations pledge to loosen grant-making requirements to meet the demands of the pandemic.

“Foundations gave more last year because of the circumstances. They were not sticking to the required payout limits. They were looking at the needs of their communities and what it would take to meet their mission,” said Kathleen Enright, CEO of the Council on Foundations. “They were rising to those occasions.”

Midyear surveys in 2020 done by the council found that 60 percent of foundations planned to increase grant making, said Enright.

Exponent Philanthropy, a group of small foundations, surveyed nearly 1,000 members in May 2020 about how their approaches were changing. At that time, more than half said they had increased their grant making.

Brendan McCormick, manager of research and education, said many of the group’s members made additional grants to support their existing grantees. “Smaller foundations typically are less concerned about maintaining their endowment over time,” he said. “They tend to be more willing to be flexible during times of crisis and dip into their endowments and replenish them later on.”

Many large funders increased their grant making, too, but it’s unclear how much of that will last.

A Chronicle review in March of the 10 largest grant makers — which represent 12 percent of all foundation assets — found that just one had committed to increasing grants in 2021.

Giving to foundations stayed relatively flat in 2020, increasing by just 0.8 percent to $58.2 billion. Osili said one reason there was less growth in giving to foundations is that some individuals chose to give directly to charities rather than putting the money into their foundations. Enright echoed that theory, suggesting that those with private foundations were motivated to put their donations to work sooner.

Bequests increased, showing an accelerating demographic shift.

Giving by bequest increased 9 percent in 2020, growing to $41.9 billion last year. While that jump is large, this category of giving is historically volatile. It has not been uncommon in the past 10 years for this statistic for swing by double-digit percentages year-over-year.

According to James, at Texas Tech University, while some of this was because of the pandemic’s deadly toll, changing generational demographics were the biggest driver. Many fundraisers also charted a greater interest in planned giving from their donors during the pandemic. Further, compared with previous generations baby boomers are more likely to be childless making them more likely to give to charity.

“We’re just now starting to get the leading edges of boomers having an impact in this bequest space,” said James. “It’s not just that this upcoming group, the baby boomers, are larger. It’s that they are increasingly likely to be childless. Childlessness is a massive driver of charitable bequest dollars.”

Support for education causes grew, bolstered by more big gifts for health and racial equity.

During the last recession, giving to education took a big hit. That wasn’t the case this time around, as giving to education charities increased nearly 7.7 percent in 2020 to $71.3 billion.

That growth was boosted by the strong year-end stock market as well as Covid-19 relief, racial-justice giving, and MacKenzie Scott’s contributions to historically black colleges and universities, tribal colleges, Hispanic-serving institutions, and community colleges.

Fundraising has been exceptionally strong for Weill Cornell Medicine. The medical school is about to close out the third best fiscal year in its history, said Lucille Ferraro, assistant vice provost for development. (Gifts to academic health-care institutions are counted in “Giving USA’s” education category rather than health.)

In April, May, and June 2020, the New York City medical school received an influx of gifts from new supporters who wanted to support Covid-19 relief efforts, including free meals and child care for essential workers.

But donors have also been enthusiastic about supporting the institution’s longer-term clinical, research, and education missions, giving fundraisers confidence to publicly launch a major campaign this week, Ferraro said.

The number of first-time donors has slowed since last year, but the college has had a steady stream of repeat donors who have increased their giving significantly.

It’s been easier to make the case for support than it had been in previous years, Ferraro said. “There’s a heightened awareness of the role of medicine and science and health care.”

The Council for Advancement and Support of Education’s latest survey of colleges and universities found that overall giving to higher education was flat over the 2019-20 academic and fiscal years. About half of colleges reported increases. But that data did not include the end of 2020, when the economy was strong and many donors made large charitable contributions.

Without in-person events, large health charities suffered.

Outside of the education sector, many health charities had a more challenging year. Giving to health charities declined 4.2 percent to $42.1 billion in 2020 from $43.9 billion in 2019.

Many in-person walks, runs, and other events that disease-related health organizations host as major fundraising events saw a drop in participation and revenue due to the pandemic.

The American Diabetes Association’s annual Tour de Cure cycling event saw revenue drop 43 percent in 2020, for example. Overall revenue at the association declined by around 20 percent last year, which led to reductions in staff, said Charles Henderson, the group’s development director.

Henderson hopes donors will continue to support the group’s programs to address racial and health disparities. According to the CDC, as many as 40 percent of people who died from Covid-19 in the United States last year were living with diabetes.” Because of Covid-19, a bright light is now shining on the existing gaps in diabetes care and prevention,” Henderson said in an email.

Donors stepped up to support human-service groups.

Perhaps unsurprisingly in a year dominated by the pandemic’s many effects, donations to human-service charities increased 8.4 percent to $65.1 billion in 2020.

The Community FoodBank of New Jersey doubled the size of its individual donor base from fiscal 2019 to 2020, adding 30,000 new supporters.

“It was like drinking from a fire hose,” said Karen Leies, the food bank’s vice president of resource development. Donations from corporations and foundations also increased significantly. “We were overwhelmed with generosity.”

Leies’s organization is not alone. A survey of the 200 food banks in Feeding America’s national network found that together they raised 106 percent more in the 2020 fiscal year than in the previous year.

At the Community FoodBank of New Jersey, about 36 percent of donors who made their first gift last year have already given again.

“We’re really hoping that the momentum continues through the end of calendar year 2021,” Leies said. “The need has not lessened even slightly in New Jersey. We’re projecting increased service for the coming year and years to come.”

But like other fundraisers who saw a spike in support for their causes in 2020, she is moderating her expectations for the future.

“It’s a big question mark in everyone’s mind what it means for 2022 and beyond,” she said. “It’s our job to make sure that the general population really understands that we don’t just get to turn a light switch and go back to normal, especially for our most vulnerable populations. It’s going to be a long, long road.”

Support increased for many commercial donor-advised funds and pooled community funds.

Giving to the broadly defined “public society benefit” category of charities increased 14.3 percent to $48 billion in 2020. This grab bag category includes most commercially sponsored donor-advised funds, United Ways, Jewish federations, civil-rights groups, and think tanks.

Several of the largest donor-advised funds reported big increases in receipts, in part because of the rebound of the stock market. The pandemic also spurred several donor-advised funds to step up their donor outreach in ways uncommon before the pandemic.

“Some people were really replenishing their account because they wanted to continue with their charitable giving goals and plans and they had depleted the account to a certain amount because of the call to action from Covid,” said Jane Greenfield, president of Vanguard Charitable, a large national donor-advised fund. “Others felt, ‘Hey, I actually had a good year financially and I know so many didn’t. I want to be able to put money in the donor-advised fund so I can sustain my support.’”

Looking ahead, Osili, with the Lilly school, said she’ll be keeping an eye on new legislation that, if passed, could affect DAF creation and payout rates.

Other public society benefit groups more directly involved in relief efforts said donors at all levels gave eagerly to address needs in their communities.

Kittie Fahey, senior vice president of individual giving at the Greater Twin Cities United Way, said giving to her organization declined from 2019 to 2020. Still, the nonprofit ended last year 3.5 percent ahead of the planned budget.

“Our donors didn’t blink an eye about stepping up. We had gifts from $5 to a quarter of a million,” she said. “We had corporations jumping forward so fast. We just had so much response and everyone wanted to help.”

The organization and the corporations that support it through workplace giving programs pivoted to virtual volunteering and fundraising events, but without the traditional in-person activities, workplace giving declined. In 2020, it made up 20 percent of total revenue at the Greater Twin Cities United Way, compared with the third of revenue those drives typically bring in.

The local United Way sprang to action in tandem with the two local community foundations to support efforts to distribute money through two emergency relief funds: one supporting Covid-19 relief and the other supporting the Twin Cities Rebuild for the Future Fund to aid small businesses owned by people of color in areas most affected by the unrest following the murder of George Floyd.

Many arts groups suffered.

Giving to arts, culture, and humanities groups declined 8.6 percent to $19.5 billion in 2020. Because of emergency social-distancing mandates that saw theaters and museums shutter for months at a time, many groups struggled to engage their donors and audiences in traditional ways.

“It wasn’t really just that donors were prioritizing other causes but also that arts organizations were constrained in their ability to engage in the activities they might normally engage in, and their fundraising potential was limited,” Osili said.

MacDonald, who as president of the fundraising consultancy Benefactor Group works with many clients in the arts, said she hopes those groups will rebound quickly. “The arts took a big hit in the last recession and came back with one of the strongest recoveries of the various sectors.”

Like other causes, the financial picture in the arts is uneven. Groups able to grow their fundraising in 2020 did so by stepping up engagement with donors, particularly wealthy and institutional donors, and framing their work against the backdrop of current events.

The Toledo Museum of Art in Ohio reported one of its best fundraising years ever, despite having been closed for three months. While its general membership revenue declined last year, the museum received increased support from major donors. The museum attributed its good fortune in part to donor excitement over a new director hired in early 2020 , as well as strong corporate support for exhibition programming on racial justice. During the pandemic, the museum also launched quarterly Zoom discussions with the museum director for its biggest donors.

“We were just in a unique position to take advantage of new leadership and a new direction,” said Jenny Wensink, the museum’s director of development. “Our donors were really excited about that messaging.”

Fewer in-person gatherings posed a challenge for religious charities.

Giving to religious causes declined by 0.2 percent last year, dropping to $131.1 billion in 2020. That total is nearly 28 percent of all giving last year. While the largest share of American giving goes to this category, that share has continued to decrease. In 1980, giving to religious groups accounted for 46 percent of all charitable giving. In 2010, it accounted for nearly 34 percent.

The decline in giving to religious causes coincides with a similarly long-running decline in American religiosity. According to Gallup, roughly 25 percent of Americans do not claim a religious affiliation, and only 47 percent of Americans belonged to a church, synagogue, or mosque in 2020. It was the first time the pollster tracked this ratio dipping below 50 percent.

In addition to economic challenges facing their donors, religious congregations also found themselves struggling to raise funds in collection plates in an environment of social distancing and virtual or limited-attendance worship services.

“This really did impact religious congregations, especially ones perhaps that needed the dollars the most,” said Osili. “Many of them did not have the technology in place and had a much longer pivot. … Covid came very suddenly and didn’t give a lot of organizations that time to build that infrastructure.”

Revenue passing through the Southern Baptist Convention’s Cooperative Program was down 0.4 percent in 2020, according to the convention’s executive committee chief financial officer, Jeff Pearson, almost in line with the year-over-year national-level trend for religious giving. The Cooperative Program is the denomination’s national-level fundraising program that gets its money from a portion of church collections after they pass from individual congregations and through state-level Baptist conventions.

“We could no longer just survive on people showing up at our doorstep every Sunday and bringing their tithe check as the offering plate passed by,” Pearson said. “We had to move ahead in the technological community and in the technological industry.”

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