Declining Giving Rates Should Catalyze the Philanthropic and Nonprofit Sectors

Phil Buchanan

The American tradition of philanthropic giving should not be taken for granted, in part because it may well be in real jeopardy.

“What’s the problem?,” you might ask. After all, charitable giving reached an all-time high in 2020 – some $471.4 billion given, according to Giving USA.

Concerning Data

But the increase in giving in 2020 was largely fueled by foundations stepping up (as so many of us hoped they would) by nearly 16 percent year over year, in response to the pandemic. Individual giving moved up only 1 percent and would have dropped were it not for MacKenzie Scott’s massive level of individual giving, again according to Giving USA.

Indiana University’s Lilly Family School of Philanthropy reported in June that the percentage of households giving to charity fell to 49.6 percent in 2018 – the most recent year for which the School has data – down from the mid 60s  during 2000-2008. Also this summer, Independent Sector, working with the Edelman Trust, reported on polling of the American public showing “a small drop in trust in nonprofits and a more significant decline for philanthropy.”

So the warning signs are flashing and we should take heed. Broad philanthropic participation is crucial as it offers nonprofits diversified revenue streams that increase their independence. There is also important legitimacy conferred, especially for community-rooted organizations, by a robust and diverse donor population that includes more than just big foundations or the wealthy.

Participation matters for our democracy: community-based nonprofits are places where citizens are able to come together across ideological, racial, and economic lines to support organizations whose missions inspire them. The decline in participation in the great American tradition of giving back should concern all of us.

It’s hard to know for sure what’s going on, especially given all the other signs surrounding giving. Why, for example, has the massive proliferation in the number of donor advised funds (DAFs) or the dropping of threshold balance levels by DAF providers not translated into the “democratization” of giving that some DAF providers hoped, at least as judged by percentage of American households giving?

Why has the incredible success (in terms of participation and dollars raised) and visibility of #GivingTuesday not yet, apparently, contributed to increases in overall participation rates in philanthropy in the U.S. – or at least not ones that are showing up in the Lilly School data yet?

To be fair, there is some good news related to individual donors in 2020. Asha Curran, the CEO of #GivingTuesday tells me that, in 2020, “A 1.3 percent top-line gain in donors was driven almost completely by an 11 percent growth in small donations between $101 and $500, the highest growth for this donor size in five years.” This tracks with the overall giving numbers that showed an increase in gifts under $250. But this is likely a pandemic-related blip.

The trends are not positive, even as it feels like giving has a higher profile. The Lilly School numbers tell us clearly that giving is simply less of a societal norm than it was two decades ago.

Is Ill-Informed Negativity Driving Down Giving?

But why? Is the increased polarization of our country to blame, with people less likely to give to anything they don’t very closely identify with? Are folks diverting what would have been charitable giving to political giving or to new forms of giving that simply don’t get captured in the numbers? Do people, increasingly living in their own bubbles, simply feel less connected to causes that are bigger than themselves? To what extent is the drop in religious participation, and related giving, contributing to the decline? (The Lilly School report points to declining trends in empathy, compassion, and interpersonal trust as potential contributors.)

I don’t know.

But I can’t help but think that incessant, sustained, ill-informed negativity about both nonprofits and philanthropy is playing a role. Back in 2009, I wrote a series of a half dozen blog posts for the Duke University Sanford Center for Strategic Philanthropy & Civil Society warning of the costs of an “attack on philanthropy” from those who “caricature the sector unfairly and … simplistically.”

I noted how commonplace it was for corporate leaders to disparage nonprofits – and how silent the sector itself often was in response. I noted that the attack also came from within, as prominent philanthropy insiders declared philanthropy broken and in need of a total overhaul.

“We undermine the sector by not telling our stories of success more forcefully,” I argued in one of the posts.

I quote myself here not to be self-referential but to point out what little difference my words made: the fact is, in the dozen years since those posts, the situation has only grown worse. The characters have changed as new critics have replaced many of the old ones, but characterizations of philanthropy have grown only cruder, more generalized, and more ideological. And I wish I could say there’s been a strong, forceful response – but there really hasn’t.

Among some on the left, philanthropic generosity is derided as the “wingman of injustice” by prominent critics who extrapolate from bad actors like the Sacklers to all givers, and who make outrageous statements like, “nonprofits are a very crucial part of how the rigged system gets rigged.” Or, philanthropic giving is slammed by those who – correctly, in my view – critique a tax system that allows for wealth accumulation on a ridiculous scale, yet wrongly conflate that issue with a critique of philanthropy.

Meanwhile, some critics on the right absurdly and dishonestly caricature philanthropy and actively engage in racial fearmongering. “Major foundations are committing staggering levels of funding to efforts that sound good, but in reality make it harder to start or maintain a business, value identity over initiative, and perpetuate the false, defeatist narrative that America is a land of racism, not opportunity,” writes one conservative foundation president, offering precious little in the way of detail.

When we push back against absurd and inaccurate generalizations like these, we are told again and again by critics of all stripes that “critique is healthy,” as if critiques should never be scrutinized but rather just silently accepted. (A side note: I am struck by how the harshest critics will often take any pushback or debate, however mild, as if it were a personal attack.) And, yes, of course, thoughtful, specific, factually accurate feedback and critique of philanthropy is healthy and indeed necessary: it’s a huge part of what CEP does. That kind of feedback and critique leads to better practice, to less top-down and more inclusive approaches, to greater empowerment of those closest to issues and communities.

But drawing broad brush caricatures of philanthropy that are false or paint it as inherently bad or problematic isn’t actually helpful. It’s destructive – and it’s likely contributing to a cynicism that is at the very least accelerating, if not driving, declining rates of philanthropic participation.

Defending Philanthropy and Nonprofits

In her brilliant forthcoming book, In Defence of Philanthopy, UK scholar Beth Breeze pushes back very persuasively on what she calls the academic, insider, and populist critiques of philanthropy. She reminds us of the powerful good that has been done by giving over centuries. To read it is to recognize how weak many of the critiques – as well as the defenses – of philanthropic giving have been, and to be reminded how essential giving really is. Breeze’s book is a much-needed call to arms.

What would it look like if community foundations, private foundations, nonprofit associations, and nonprofits themselves took up that call – if they joined together and defended and much more aggressively promoted the simple idea that giving is a good thing? And giving effectively a really good thing? What if we all did more to support efforts like #GivingTuesday? What if, rather than inviting the harshest critics to our conferences to gin up interest (I plead guilty), we instead invite only those whose critiques evince deep knowledge of (and even first-hand experience with) philanthropy and the nonprofit sector and the varied and diverse roles they play?

What if we were to really respect and elevate the stories of the myriad nonprofits, and their staff, that are doing heroic work in incredibly challenging circumstances? What if we reminded folks more powerfully and assertively of all the ways in which our lives are better because of philanthropy and nonprofits – from vaccines that prevent disease to arts and culture enriching our lives to the myriad organizations helping the most vulnerable among us or others fighting for the expansion of human rights?

Look, I don’t have the answers, but I believe this much: that we ignore the increasing evidence of a significant decline in giving participation levels at our own peril.

Phil Buchanan is president of the Center for Effective Philanthropy, author of Giving Done Right, and co-host of the podcast by the same name. Follow him on Twitter at @philxbuchanan.

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