Are Americans Becoming Less Generous?
Further, expanded reflections on Giving USA’s annual report on philanthropy.
Are Americans becoming less generous? If you’ve followed the news this summer, you may have formed that impression.
- “Americans got less generous in 2022,” CNN’s Tami Luhby reported in June.
- “Americans Got Stingier,” NBC News likewise headlined.
- “Now, charitable giving is on the decline in a way that threatens the fabric of our society,” two Newsweek contributors opined, declaring “nothing less than a national crisis.”
The notion in popular media that Americans are becoming less generous—-stingier, even— was sparked this summer by Giving USA’s latest report on charitable contributions.
The annual industry-funded report showed that charitable giving in 2022 retreated from an historical high in 2021, falling by 10.5% to $499 billion in inflation-adjusted terms. Every category of donors—individuals, estates, foundations, and corporations—gave less last year. And every class of charitable recipient, except for private foundations and international affairs, received less after adjusting for inflation.
These findings affirm the widely held assumption that 40-year-high inflation and a retreating stock market would result in less giving or, as the headlines emblazoned, diminished generosity. But that assumption—like the media headlines and the report itself — may be wrong.
In The Chronicle of Philanthropy, I wrote an opinion piece about how in order to better understand giving in America in 2022, we needed to consider what the Giving USA report leaves out.
I cited management guru Peter Drucker’s often-quoted remark that the most-important thing in communication is to listen to what’s not being said. What’s not said in the annual compendium of the prior year’s charitable giving statistics, I wrote, says more about the state of philanthropy in America than what is said.
I publicly and privately received many responses to my observations about what Giving USA leaves out of its report and to my assertion that average Americans are giving more and not less by necessity.
The Chronicle of Philanthropy argument did not express the fullness of my position, which is that fewer Americans are giving to traditional charities in part because America’s regime of tax-incentivized charitable giving doesn’t serve them. Our system of tax-incentivized charitable giving germinated a permanent, professional philanthropic class insulated from the needs and ways of being of average Americans, which is reflected in Giving USA 2023.
The business interests of the professional philanthropic class—not the needs or charitable practices of average Americans—drive Giving USA research. That, of course, is obvious and is made apparent by the report’s publisher. It is precisely in its service to the philanthropic industry, however, that Giving USA renders invisible the varied and emerging ways in which Americans are looking inward—looking after themselves and others—and away from nonprofits and government-sanctioned ways of giving.
I wrote earlier this year in The Chronicle of Philanthropy and The Giving Review’s online symposium, “Conservatism and the Future of Tax-Incentivized Big Philanthropy,” about how the conflict of interest baked into tax-incentivized charitable giving has given rise to a self-serving professional philanthropic class that puts the financial interests of its wealthy patrons, its organizations, and itself before the people it purports to help. This professional philanthropic class has been successful in preventing legislative changes averse to its wealthy patrons’ interests, as well as its own.
Impervious to change and adaptation to the economic realities affecting working-class families, this system of tax-incentivized charitable giving has been stagnant for decades, never exceeding 2% of GDP, hemorrhaging average donor households year after year, all the while showering America’s wealthiest with special tax privileges.
My reflections on Giving USA 2023 represent another wrinkle in this argument. Giving USA is an important way in which America’s professional philanthropic class defines the contours of acceptable giving, of what’s charitable and what’s not, of who counts and who doesn’t. As the headlines cited above suggest, Giving USA’s reports have cultural currency far beyond the industry insiders who fund them.
Giving USA 2023 is not merely a nerdy compendium of IRS charitable data intended for industry insiders. It is a rhetorical document promoted aggressively by its publisher in the public square. Its marketers invoke the gravitas of its public-university pedigree to affirm and validate certain ways of giving over others. It disciplines professional and public opinion and shapes public policy. And to the extent that it leaves out the charitable practices of a great swath of average Americans, it contributes to the growing divide between the philanthropic professional class and average Americans.
In this way, I believe, Giving USA 2023 is one concrete artifact that contributes to—rather than merely reports on—the decades-long decline in household giving that has flummoxed the professional philanthropic class.
I would like to discuss the objections I received to my reading of Giving USA 2023, but first let me recall in greater fullness what the report does not include and how in doing so, it supports my broader argument.
What Giving USA Doesn’t Report
For starters, Giving USA 2023 is silent on the nonprofit world’s biggest revenue drivers: government grants and contracts and fees for service, which amount to 80 cents of every dollar of nonprofit income in the United States.
By ignoring these primary revenue sources, Giving USA gives a portrait of less than 20% of the field’s total annual revenue andoverstates the role private philanthropy plays in supporting America’s nonprofits. Contributions from private foundations in the Giving USA report, for example, account for 21% of all giving. But when government and earned revenue is factored in, private foundation giving is less than 3% of nonprofit revenue.
According to the Nonprofit Quarterly 2020 Map of the Nonprofit Economy, fees for nonprofit services, such as medical bills and tuition paid to nonprofit hospitals and universities amounted to $1 trillion. Federal government funds accounted for another nearly $500 billion. Whatever share private philanthropy once had in funding independent and voluntary civil-society organizations, it’s far less today.
Through these omissions, the Giving USA 2023 report perpetuates the myth that America’s nonprofit sector operates independently of government through mostly non-commercial enterprises supported by private philanthropy. In fact, in terms of revenue, the nonprofit world in America is primarily a commercial enterprise funded through fees for services and government grants.
If Giving USA 2023 overstates private philanthropy’s role in funding nonprofits, it also understates the role charitable giving plays in the lives of average Americans by disregarding the way millions of people actually give.
The report does not, for example, include crowdfunding, except for when donations flow through federally recognized nonprofit organizations, which they seldom do. Yet, crowdfunding has emerged as an expedient way for average American givers—those without a family foundation, donor-advised fund, private bank account, or philanthropic advisor—to make financial gifts directly to those in need. By some estimates, more than $17.2 billion is generated annually through crowdfunding.
In 2022, more than 28 million people sent or received donations through the popular crowdfunding platform GoFundMe. Since 2010, $25 billion dollars has been raised through GoFundMe alone. A 2021 study published in the Journal of the American Medical Association, showed that 26% of all GoFundMe campaigns since 2010 were created to cover health-care-related costs.
GoFundMe and other crowdfunding platforms offer a clear window into the needs of average Americans and their giving priorities, which include medical and dental bills, gas money, auto repair, child care, tuition, food, clothing, and so on. The econometricians behind Giving USA 2023 find little to report about crowdfunding, however. To them, “giving is defined by econometric analysis and tabulations of tax data, economic indicators and demographics,” not by how millions of people in this country donate their money.
Yet, there is a universe of giving in America that lives outside the purview of Giving USA: ways of actual giving that don’t fit the econometricians’ theoretical models.
For example, the re-emergence during the pandemic of mutual-aid associations—people coming together to take care of each other’s needs—may be the most-significant recent development in how people give their time, money, and resources. Even before the pandemic, hundreds of mutual-aid networks emerged across the United States as people banded together to “sew their own safety net,” as journalist Annie Lowery put it in The Atlantic.
Giving USA 2023 has nothing to report about the growth or even the existence of mutual-aid groups. A multitude of charitable acts—peer-to-peer giving, rounding up for charity at the grocery store, leaving a career to care for an elderly parent, tipping extra to support a waitress without health insurance, and giving a dollar to a homeless veteran on a street corner—don’t constitute giving to Giving USA econometricians.
Americans Know Little About Philanthropy
The authors of Giving USA 2023 at the Indiana University Lilly Family School of Philanthropy, which oversees Giving USA reports, acknowledged in a 2019 study entitled “Changes to the Giving Landscape” that “[n]ew methods need to be developed to measure giving that is outside the traditional tax return data and surveys about charitable giving.” They note that “[p]rivate transfers, crowdfunding, and supporting social enterprises are several ways Americans today may be behaving philanthropically while their giving goes unmeasured by traditional methods.”
Yet, even as they realize that broad swaths of charitable giving are not captured in their annual assessment, these same researchers are befuddled by what they call the “declining donors phenomenon.” They show that the share of Americans donating to charity fell from two-thirds in 2000 to fewer than half in 2018—a downward trend that seems to be holding. On top of this, these researchers also found “a broad decline of the trust held in nonprofits over time by the public.”
Could there be a correlation between Giving USA’s self-acknowledged retrograde methodology—and the cultural assumptions inherent in that methodology about which types of giving and givers are important and which are not—and declining public trust in the nonprofit institutions from which average Americans are retreating? In other words, when the nation’s flagship annual report on giving renders invisible millions of Americans’ acts of charity, maybe those Americans begin to feel like our system of tax-incentivized charitable giving isn’t about them.
Maybe when people aren’t counted, they stop showing up. That seems to be the prevailing sentiment in yet another report by these same scholars that shows how average Americans know little about philanthropy. Average Americans aren’t aware, the study shows, of policy debates about tax-incentivized charitable giving, the range of charitable giving vehicles, or whether they’ve ever benefited from the work of nonprofits, among other things.
The social, policy, and regulatory preoccupations of the professional philanthropic class are invisible to average Americans, just as the needs and charitable acts of most Americans are invisible to the professional philanthropic class. There is an inevitability to this when, as Stanford University researcher Lucy Bernholz writes, “the rules about giving are … written in ways that benefit only the wealthy, even as the vast majority of giving comes from everyday people.”
What’s not said in Giving USA 2023 illustrates well the great and growing divide between what the few on top know and experience about the many on the bottom and vice versa. Perhaps no other institution better illustrates our divided America than philanthropy.
An Undercurrent of Invisible Giving
What Giving USA 2023 doesn’t report, count, or appreciate, is that Americans aren’t giving less—they’re giving differently and, I believe, they’re giving more, by necessity. Not only are the ways average Americans give invisible to the philanthropic professional class, by extension so are their circumstances and needs.
During this period of so-called declining donor participation, average Americans shouldered the brunt of the 2008 financial crisis and Great Recession. More than 10 million people lost their homes and $2.4 trillion in retirement savings disintegrated. These are only a few reasons why retirement fears are rising among working-class Americans, with one-third of workers now expecting to retire at 70 or later, or never.
Average Americans also fought disproportionately in America’s 20-year wars in Iraq and Afghanistan. And they died at higher rates during the Covid-19 pandemic and suffered relatively higher economic losses.
Today, they carry the bulk of historically high inflation and debt, as well as ever-growing wealth, wage, and income erosion and inequality. On top of this, record numbers of young adults have moved back home with their parents and grandparents. Nearly 60 million Americans now live in multigenerational households—the highest on record.
If a person’s charitable contributions to nonprofits decline because he or she has taken in their adult children or aging parents, are they now less generous? Are they giving less or more? Are they making a positive or negative contribution to civil society?
Americans have sacrificed a lot during the past 20 years, and their reward is a system where the top 1% of households now own more assets than the entire middle class. So, they’re looking to each other, taking care of themselves, their families, and their communities, because no one is looking after them.
Have Americans, as NBC News proclaimed in its headline reporting on Giving USA 2023, gotten “stingier”? Or, as CNN reported, become “less generous”?
I don’t think so. I think that Americans are retreating from our regime of tax-incentivized charitable giving and its attendant professional giving culture analyzed by Giving USA because it doesn’t serve them. It’s not that they don’t understand charitable giving or that they’ve stopped giving, it’s that the system doesn’t even count them.
The philanthropic professional class is preoccupied with the system of giving rather than with those it’s intended to serve. They are adrift on a self-serving sea, observing only the tip of the iceberg of need in this country, unaware of the great drowning masses below.
It May Be Generous, but It’s Certainly Not Philanthropy
As I mentioned above, I received many public and private comments on my argument in The Chronicle of Philanthropy. Two stand out in particular.
Some critics faulted me, as Center for Effective Philanthropy president Phil Buchanan puts it, for not understanding that Giving USA “should not be seen as some kind of barometer on folks’ generosity of spirit more broadly.” There are many forms of generosity, he writes, but the ones that matter most are those that send donations to nonprofits, not individual acts of kindness or charity.
“Look, it’s lovely that my neighbor brings over a dinner after I had surgery, but it’s also an entirely different act than giving to a nonprofit. It certainly isn’t philanthropy.” What shouldn’t be overlooked, he continues, is the significant decline in the number of households giving to nonprofits.
As a colleague of mine pointed out, this critique has it precisely backward. It treats informal, close-to-home charity as if it were a negligible residual after the serious business of writing a check to the Red Cross is finished. As Alexis de Tocqueville observed in Democracy in America, however, this type of giving is not peripheral, but is at the core of civic engagement in America.
People getting involved in the welfare of their neighbors and community is the only way to teach an otherwise-individualistic and potentially self-centered people about civic and democratic responsibility. Charity takes root at home, grows through familial and community bonds and affections, then flourishes in the public square. Indeed, mutual-aid associations and crowdfunding look a lot more like the voluntary civil associations praised by Alexis de Tocqueville, than many of the commercial and government funded nonprofit enterprises of the professional philanthropic class.
Others likewise took exception to the notion that giving outside of government-sanctioned nonprofits is beyond the scope of Giving USA, cautioning again that the report is not a measurement of American generosity or charity generally—despite how it’s publicized and reported in national media—but rather only “reports on what the Internal Revenue Service identifies as tax-deductible charitable gifts.”
For these critics, Giving USA is an invaluable index providing longitudinal data for the key industry insiders—direct marketing firms, fundraising consultants, financial investment firms, etc.—who fund the study. Their business models, after all, are predicated on an ever-expanding, government-regulated marketplace of charitable transactions flowing to “traditional charities,” like the Red Cross. To these critics, Giving USA is about the business of giving. “The question is, given the data, how do we respond and engage more people?” the president of Visionary Philanthropy Consulting asks.
There is, of course, an obvious truth to this. Giving USA serves the interests of its funders. That much is clear. I think, however, this points to an important problem in philanthropy more broadly. It is a moral problem that every nonprofit director at some point must answer. Whom does philanthropy serve?
I have argued above that declining trust in nonprofits, as well as fewer households donating to traditional nonprofits, may be an indication that philanthropy has become too self-interested. There is, as I have written elsewhere, a conflict of interest rooted in tax-incentivized philanthropy that spawned a permanent, professional philanthropic class that principally serves the financial interests of its wealthy patrons. The class helps guarantee greater success to the successful. Giving USA 2023 is one example of the work product that this self-serving system delivers to its patrons.
This article originally appeared in the Giving Review on August 9, 2023.