Americans gave an estimated $499 billion to U.S. charities in 2022, representing a decline from the extraordinary generosity exhibited during the pandemic era (based on data from Giving USA). The decrease follows the two strongest years of charitable giving on record in inflation-adjusted terms, including 2021 when giving surpassed $500 billion for the first time.
Despite recession fears, market swings, rising inflation and interest rates, philanthropists continue to demonstrate incredible creativity and generosity through their charitable giving.
With that backdrop, we are encouraged to see four major trends that continue to impact philanthropy today.
First, individuals should continue to comprise the largest source of total charitable giving in the United States. Currently, they make up 64 percent of all donations. The vast majority of high-net-worth families are engaged in philanthropy with around 90% giving to charities each year.
Mega-gifts, which are donations of $10 million or more, from ultra-high-net worth individuals totaled $14 billion in 2022 and represented about 5 percent of all giving by individuals for the second year in a row.
Along these lines, we are seeing individuals employ creative and sophisticated capital in their grant-making. Charitable giving has become much more diversified in today’s philanthropic marketplace. Donors at all levels are seeking savvy, strategic, and convenient ways to improve the world we live in and while maximizing their tax and financial situations.
In addition to cash, donors are optimizing non-cash assets like equities, shares of privately held companies, venture capital, private equity, digital currencies, art, and real estate. Increasingly, donors are looking beyond their checkbooks to offer charitable support, and complex assets can be hugely impactful for donors and charities alike.
In addition to the innovation and change in how individuals are giving, we are also seeing changes in who is giving. There is a significant rise in the next generation of philanthropists through the great wealth transfer.
With an estimated $30 trillion expected to be passed down from Boomers to Generation X to Millennials and Gen Z over the next 30 years, we expect giving related to estate and legacy planning to accelerate in 2024.
The last trend is tech innovation, specifically, the use of technology and big data to make philanthropy easy. Younger generations tend to gravitate towards technology as the channel for their philanthropy.
In 2022, mobile devices were responsible for the majority of all visits to nonprofit websites, and over 75 percent of the surveyed Gen Z and Millennial donors reported preferring giving online.
This trend, coupled with the fact that the younger generation is more episodic and responsive in their grant-making, will give a good boost to causes like disaster response, social justice, climate issues, and mental health.
In summary, what we have learned from giving in 2022 is that trends in the philanthropic marketplace contribute to a very complex and ever-evolving understanding of how to approach the future. While economic conditions have caused an overall decline in giving, philanthropy continues to be very strong and plays a significant role in solving the issues and problems in today’s society.