Giving USA 2023 Report: Four Donor Trends Nonprofit Leaders Need to Know

The longest running annual report on U.S. charitable giving is presented each year by Giving USA Foundation™. Since 1956, this has been a valuable source of data about total charitable contributions as well as the source of donations and what types of nonprofit organizations receive them.

The 2023 Giving USA Annual Report on Philanthropy for the year 2022 revealed total giving amounted to $499.33 billion last year. This article presents four of the top trends in this year’s Giving USA report. We also present tips for how your organization can use these trends to improve your mission storytelling to increase funding.

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Trend #1: Nonprofit giving declined in 2022, and inflation added to financial pressures

Total giving in 2022 reached $499.33 billion, a decrease of 3.4% compared to 2021. An outright decline is quite unusual; since 1982, total charitable giving has increased or stayed flat in all but three other years. While that was unwelcome news for nonprofits, when compounded with high inflation rates, the financial picture worsened. In inflation-adjusted terms total giving in 2022 fell by 10.5%. Inflation-adjusted giving has only fallen in nine other years since 1982.

Individual giving declined in 2022 versus 2021, both in terms of present-day and inflation-adjusted dollars. However, individual giving still greatly exceeded all other sources of funding, contributing 64% of all funding for the nonprofit industry.

Storytelling tip: With budgets pressured by inflation, donors look to narrow their list of charities so the donations made will make a bigger impact. Recognize inflation may make it more difficult for donors to give now and acknowledge them for their consistent generosity. Incorporate metrics into your appeals that demonstrate your organization’s financial fitness and show the impact of contributions. Using a modern nonprofit financial management solution makes it much easier to show donors proof of your organization’s impact.

Trend #2: Some nonprofit sectors saw growth in donations while others saw a decline

While it may seem disappointing that overall giving declined in 2022, there were bright spots in the story. It is important to note six of nine nonprofit subsectors received contributions that continued to exceed pre-pandemic levels, even after adjusting for inflation. These six subsectors were:

• Religion (+5.2%)
• Foundations (+10.1%)
• Health (+5.1%)
• International affairs (+10.9%)
• Arts, culture, and humanities (+2.9%)

More than one-quarter of all contributions went to religious organizations. Foundations received 11% of total contributions and health-related missions received 10%. Giving to international affairs organizations made up 6% of overall giving and this subsector enjoyed the fastest growth in 2022. Much of this giving was driven by urgent world events, including the Russian invasion of Ukraine.

Storytelling tip: These subsector statistics remind us of an important tenet of nonprofit giving. Even in lean economic times, people give to causes that are timely, urgent, and highly covered by the media. During the pandemic, the health subsector attracted many contributions. In 2022, people were moved to give to international affairs in light of European geopolitical events. In your own storytelling, don’t hesitate to create a sense of urgency when appropriate.

Trend #3: The mix of donation sources continues to change

Last year saw a continuation of evolving trends in the sources of giving. While individuals still provide the majority of charitable donations, their percentage of giving has dropped steadily over time, from 81% of total contributions in the five-year period of 1983-1987 down to 67% in 2018-2022.

Giving by corporations holds fairly steady between five and six percent of total giving, declining slightly over time. Giving by bequest has been mostly steady with a slight rise over time.

The growth story of 2000-2022 has been in foundations, which have increased from six percent of total giving in the 1980s to 21% in 2022. Total giving by foundations reached $105.2 billion in 2022. Giving by foundations includes grants made by independent, community, and operating foundations. Foundation giving has nearly quadrupled in current dollars since 2002. Even after inflation, this source of contributions more than doubled in size over the last 20 years.

Storytelling tip: Communicating with individual donors will continue to be one of the primary focuses of fundraising. However, nonprofits need to focus more on appealing to foundations. In 2022, foundations provided $1 out of every $5 in funding. Foundations focus on financial transparency, proof of excellent financial stewardship, and outcomes measurements. You will also need to demonstrate competency in grant management and restricted funds, including grant tracking and billing.

Trend #4: Charitable bequests reached $45.6 billion and will rise

Nonprofits received nearly $46 billion in giving by bequests in 2022, up 2.3% from 2021 in current dollars, but still a decline when adjusted for inflation. Nine percent of all gifts made in 2022 were by bequest. Bequests were received from estates that ranged in size:

• Estates $10 million and above gave $24.27 billion.
• Estates between $1 and $10 million gave $9.47 billion.
• Estates with assets below $1 million gave $11.86 billion.

Economists and financial analysts predict the passing of the Baby Boomer generation will create the greatest intergenerational wealth transfer in history. Estimates of the total amount of inheritances range from around $30 trillion to as much as $84 trillion. Generation X and Millennial children, as well as some Gen Z grandchildren, will inherit the bulk of the wealth, but the nonprofit industry will also enjoy a share.

Storytelling tip: Now is the time to hone your planned giving strategy and talk to your existing older donors. According to a 2008 study by Dr. Russell James, only 10% to 12% of donors will die with bequests to charities in their wills. In your communications, show donors how your organization can put bequests to work. If possible, incorporate examples of the impact made by past bequests. Find ways to provide recognition of a lasting legacy (for example, naming a program after donors). Be prepared to speak in general terms about the potential to reduce estate taxes by leaving bequests to charity.

There’s another way the ongoing Baby Boomer wealth transfer should impact your storytelling. Messaging about your mission needs to be refined by donor generation. In the coming years, you will need to appeal to the generations that receive this wealth.

Final thoughts

Without adequate funding, there can be no mission. That is why staying on top of giving trends is vital to your organization’s long-term success. Different types of donors need to hear different aspects of your mission story. And in today’s digital, data-driven world, donors expect to see real-world, timely data and metrics proving your organization is creating successful outcomes.

Discover how to tell your organization’s mission story with greater clarity and urgency using data and metrics, download the Nonprofit Storytelling e-book.