After Black Friday’s record-breaker for online sales, there’s hope that the holiday haul for nonprofits will also be generous on Giving Tuesday, and throughout the year-end charitable giving season.
That would be a welcome development for charities that have been burned by inflation and experienced an overall drop in donations last year, experts say.
It would also be an upbeat signal about consumers’ financial health and the overall economy at a time when economists and companies are again trying to determine if a recession is coming.
Considering the link between charitable giving and the stock market — giving tends to mirror market performance — a fruitful Giving Tuesday could also be a reassuring data point for investors wondering how their portfolio will fare the rest of the year.
“We see people giving when they are feeling financially and economic secure,” said Dr. Una Osili, associate dean for research and international programs at Indiana University’s Lilly Family School of Philanthropy.
Inflation rates have been easing and unemployment levels are low, she said. Then there’s the stock market’s recent pushes higher.
The final stretch of the fourth quarter is usually when many donors, large and small, decide what they can contribute. “The indicators are very positive around a strong giving season,” Osili said.
From Russia’s invasion of Ukraine to the Israel-Hamas war, the range of international and national problems may also spur more giving, she noted.
Though Osili said it’s tough to forecast charitable giving trends based on post-Thanksgiving shopping numbers, Rick Cohen, chief operating officer at the National Council of Nonprofits, had a different take.
“A strong Black Friday and Cyber Monday generally can bode well for Giving Tuesday,” he said.
“Black Friday and Cyber Monday are indicators of people having money to spend. And when they have money to spend, it also means they have money to donate. And so we are cautiously optimistic,” Cohen said.
But Cohen put emphasis on the caution part. For one thing, Giving Tuesday donations also have to contend with student-loan payments that resumed in October. “We’re hopeful, but still worried,” he said.
In last year’s Giving Tuesday, donors contributed $3.1 billion, notching a 15% year-over-year increase. The annual campaign, which started in 2012, helped raise $10 billion in its first decade.
Despite the uptick in donations on Giving Tuesday last year, U.S. charities saw an overall decline in donations across 2022 as a whole. Americans pulled back on charitable giving while they coped with four-decade high inflation rates and stock markets that recorded their worst yearly performance since 2008.
Individuals, foundations, corporations and other donors gave $499.3 billion in 2022, down from $516.6 billion one year earlier. 2021 and 2020 were record years for donations, according to the report published by the Giving USA Foundation and written by researchers at the Indiana University Lilly Family School of Philanthropy.
The 2022 dip marked the fourth time in four decades that donations dropped from one year to the next, the report said. The other three years were serious trouble spots for Wall Street and the broader economy: 1987, 2008 and 2009.
Nonprofits are feeling the pinch
2023 hasn’t been easy for the country’s estimated 1.3 million nonprofit charitable organizations, according to Cohen. They’ve faced rising costs, like other segments of the economy, and many have funding from government grants and contracts that haven’t been adjusted for inflation in years.
Amid inflation, better pay elsewhere is intensifying a nonprofit workforce shortage, according to a National Council of Nonprofits survey in April.
Seven in 10 surveyed nonprofits anticipated the same or fewer donations and the same or fewer donors, the survey added.
Last year, individual donors gave an estimated 1.7% of their disposable income to charity, according to the Giving USA report. That’s the smallest share of disposable income donated since 1995, but it’s still around the average 2% share of disposable income that people have been donating for years, said Cohen.
Even if the share of donated disposable income stays the same this year, if donors have more money to pull from, Cohen said, it’s still very helpful.
“Nonprofits have always been inventive in trying to find ways to keep serving as many people as they can in the community. We’re just finding a lot of organizations bumping up against the limits of what they can do,” he said.
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