Mike’s Monday Message: Giving USA 2023: Help Stop Individual Giving Declines

For the last two years, the AFP Foundation for Philanthropy’s Fundraising Effectiveness Project has been reporting declines in key fundraising metrics including dollars donated, number of donors, and donor retention rate. Specifically, the Q4 2023 report, which was published in April of this year, noted a 2.8% YOY drop in dollars, a 3.4% drop in donors, and a 2.5% decrease in donor retention.

Last week Giving USA released their Annual Report on Philanthropy for the Year 2023, which, while slightly more optimistic, does confirm many of the concerns highlighted in the FEP data. 

Giving USA reported a 1.9% increase in giving in current dollars, however, as we have become all too familiar with, over the past few years, high inflation rates have reduced the practical impact of these gains. When taking into account the 4.1% inflation rate for 2023, giving declined by 2.1%. 

Notably, Giving USA breaks out their giving data by source, differentiating between individual giving, foundations, bequests, and corporations. This delineation gives us more insight into where the industry is being buoyed and what areas of giving are still facing significant challenges.   

Much of the 1.9% pre-inflation total growth was driven by large increases in bequests and giving by corporations. Individual giving saw the lowest growth — a decline of 2.4% when adjusted for inflation. 
This comes on the heels of a 13.4% inflation-adjusted decline in individual giving in 2022. 

While better than expected stock market performance and GDP growth in 2023 did offer some stability this year as demonstrated by the increases in giving by corporations, we are still seeing individuals reduce their giving in the face of the high cost of living and continued inflation. 

This is particularly evident in the latest FEP report, which noted that donors contributing less than $500 were responsible for 79.3% of the overall decrease in donors.

Now more than ever, we need incentives to drive charitable giving by these small donor groups that make up such a large percentage of our donor base.

So, what can we do about this decline?

One thing you can do is encourage your representatives in Congress to support the Charitable Act, a bill which, if passed, would reinstate the universal charitable deduction, which expired at the end of 2021.

The universal charitable deduction allowed individuals who do not itemize deductions to deduct $300 ($600 for joint filers) of qualified charitable contributions from their taxes. While this deduction was in effect in 2020 and 2021, there was a near 11% increase in small donations in the $300-$600 range, however, there was a 5% decline in 2022, as the deduction was allowed to expire, demonstrating the impact tax policy can have on individual giving. Unfortunately, with the expiration of the deduction, 90% of Americans had no tax incentive to give last year.

The proposed Charitable Act aims to incentivize individual giving and reverse this decline in donations by reinstating and raising this deduction to $4,600 for individuals ($9,200 for joint filers).

But we need your help to get this bill passed! Take action today.

The form on our website makes it easy for you to find your representatives and send them an email letting them know how important this bill is to your organization. Together, as an AFP community, we have the power to influence these decisions and change these trends currently impacting our profession.

I hope you’ll join us in taking action now and during AFP’s Lobby Week, August 5-9. During Lobby Week, we encourage chapters to visit their state’s elected representatives, either in-person or virtually, to share the impact that legislation like the Charitable Act has on our sector. 

As always, please feel free to reach out to me with any questions or concerns. You can reach me via email at Mike.Geiger@afpglobal.org or on X at @AFPMikeGeiger. 

Mike Geiger, MBA, CPA