Nonprofits are facing significant, arguably unprecedented, challenges and it’s crucial that donors, whatever their ideologies or particular programmatic goals or priorities, pay attention. Three developments, in particular, worry me: a drop in rates of giving to nonprofits; widespread staff burnout; and an increasing effort to target nonprofits based on their missions and values.
Donors Down, Dollars Down?
Let’s start with the drop in rates of giving to nonprofits. A recent report from the Lilly Family School of Philanthropy at the University of Indiana notes that the proportion of U.S. households giving to charitable organizations has fallen from two thirds in 2000 to just 47 percent in 2020, the most recent year from which data on giving participation levels is available. The decline has been driven especially, most recently, by a drop-off in secular giving.
Significantly — and contrary to what some arguing for a broader definition of giving that goes beyond donations to nonprofits have asserted — generosity has not been redirected to direct, person-to-person giving. “It is important to note that private transfer giving rates have not witnessed any significant increases between 2008 and 2020,” the report states.
Notwithstanding what sometimes feels like increased attention on philanthropy, the stark reality is fewer and fewer Americans are giving. For years, this drop in giving rates was overlooked because overall giving — in terms of total dollars donated — increased; what the authors of the Lily School report described as “donors down, dollars up.”
However, it may be now becoming “donors down, dollars down.” In 2022 and 2023, total giving declined in inflation-adjusted dollars. A national commission recently released a report on what might be done, including, importantly, making the tax deduction for charitable giving available to all tax-payers. But there is scant evidence of success, yet, in turning this troubling trend around.
Burnout Among Nonprofit Staff
The second development is widespread burnout among nonprofit staff — who make up 10 percent of the American workforce — fueled by many factors including a tougher fundraising environment. In a survey CEP conducted last year, nearly all nonprofit leaders expressed some level of concern about their staff burning out and more than a third reported that it is “very much” a concern. (We will be taking the pulse of nonprofit leaders on this topic again this year.)
Nonprofit staff burnout shouldn’t surprise us. Low wages, especially at front line human services organizations (as documented in this Independent Sector and United for ALICE report), combined with what is often extremely challenging and emotionally draining work, conspire to leave many nonprofit workers exhausted. The burnout will likely only intensify as we head into a political climate in which federal funding on which many nonprofits — especially front-line human services providers, depend — is likely to be cut.
Political Threats Facing Nonprofits
The third development relates to increasing threats of governmental action against nonprofit organizations whose efforts are opposed by elected officials. Vice President-elect J.D. Vance has gone so far as to call for the seizing of assets of endowed nonprofits he opposes.
Nonprofits, of course, represent the full range of perspectives of the citizens who create and staff them. “If you can’t find a nonprofit institution that you can honestly disrespect, then something has gone wrong with our pluralism,” John Gardner, a great nonprofit leader (and founder of Independent Sector) who had previously served in Lyndon B. Johnson’s presidential administration, quipped more than 40 years ago.
But, today, that pluralism is under threat. Many worry that legislation similar to a bill passed last year by the House, which would have allowed the government to easily revoke the nonprofit status of organizations it opposes under the pretense of fighting terrorism, will be introduced again in 2025.
More broadly, a just-released report from the Democracy Funders Network puts it in stark terms:
Repression is already under way on various fronts at the state and federal levels, and the narrative environment has rarely been more hostile to philanthropy and nonprofits. Officials and advocates are increasingly attacking philanthropic and charitable organizations on ideological grounds, with calls to strip their tax status or pen investigations based on the substance of their ideas, rather than the legality and appropriateness of their charitable activities. Allegations of corruption, wrongdoing, or even foreign interference are often levelled against charitable organizations, based on limited or nonexistent information.
These threats to our vibrant, diverse, and vital nonprofit sector should alarm us all.
What’s a Donor (or Concerned Citizen) to Do?
What, then, should major donors and foundations do? I don’t have the answers, but I have ideas.
First, I would suggest that we desperately need a campaign to help educate Americans about the value of the nonprofit sector. I am no messaging expert, but I’d suggest that we remind people that their lives have been touched by numerous nonprofits, whether they know it or not.
We should try to communicate something like this:
Have you — or perhaps someone in your family — been helped through addiction, abuse, illness, or homelessness? It very likely was a nonprofit that helped you or your loved ones. Have you walked on a trail through beautiful woods? Chances are, it is land conserved by a nonprofit. Did you or your kids spend time at a Boys & Girls Club or another youth-serving organization when growing up? These are the kind of nonprofits that are embedded in the fabric of every community. Have you visited an art museum? Most likely a nonprofit. Been helped by a food bank or a church in your local community — or know someone who was? You guessed it: nonprofit.
The nearly two million nonprofits in the United States contribute in innumerable ways to making this country better.
I’ve made this case before — for a campaign about the importance of nonprofits — and been told it isn’t possible, that messages about the sector don’t “test well.” OK, then: let’s keep refining them until they do. I firmly believe it’s both possible and necessary to tell this story.
In the meantime, a second action we can take is to remind our political leaders, and anyone else who will listen, that the overwhelming number (90-plus percent) of nonprofits are small, with budgets under $1 million, and that most are local and span the ideological spectrum. The distinctively rich tapestry of American civic organizations has a long history. It is something French sociologist Alexis de Tocqueville observed in the 1830s and 1840s: he saw these organizations as a ballast to a strong democracy — and a deterrent to despotism.
More than a century later, Gardner observed that, “our tradition of voluntary association is still vital. And its vitality is rooted in good soil — civic pride, compassion, spiritual commitments, a sense of individual responsibility and … commitment to the great shared effort to improve our life together.”
Gardner was a liberal, but this sentiment has historically crossed political divides. In his 1988 Republican National Convention speech, then-presidential candidate George H.W. Bush spoke powerfully of community organizations as “a brilliant diversity spread like stars, like a thousand points of light in a broad and peaceful sky.”
Belief in the power of community organizations to do good isn’t partisan. It isn’t ideological. It’s American.
Third, donors and institutional funders can support nonprofits in combatting burnout by giving as generously as possible and in ways that are flexible and supportive. If an organization’s goals largely overlap with yours, provide it with unrestricted, multi-year funding. I’m not saying there is never a place for a single year or program-restricted grant; I am saying that organizations need a lot more flexible funding than they’re currently receiving.
Finally, taking a wider view than just the big donors, we should wrestle with the question of what all of us as regular citizens can do — and what we can encourage our friends and family to do?
I think we can start by identifying organizations we can support and give to, even if they are simply ones that have helped us in our lives. We can volunteer. We can help our children to understand the importance of giving back. And we can make clear to our elected officials that we value the freedom of donors and nonprofits to pursue goals that matter to them, whether we personally agree with them or not.
Nonprofits have helped prevent diseases and care for those afflicted by diseases, worked to make our air and water cleaner, brought joy and comfort to those experiencing hard times, helped new immigrants settle in their new country, fought for the marginalized, and served to bring communities together across all kinds of divides, to name just a few examples.
We — all of us — must support, defend, and protect America’s nonprofits.
Phil Buchanan is president of the Center for Effective Philanthropy, author of the 2019 book Giving Done Right: Effective Philanthropy and Making Every Dollar Count, and co-host of the Giving Done Right podcast.
