More money than ever was given in 2020, but is it the best we can do?
The good news is headlines: Charitable giving rose 5.1% – to nearly $ 23 billion – in 2020, according to Giving USA 2021: The annual philanthropy report for the year 2020.
Below the surface, the picture is more nuanced.
In many ways, this is a story of uneven adversity, uneven economic recovery, and inadequate policies to encourage philanthropy.
Charitable giving reached a record high of $ 471 billion as donors responded to suffering caused by a rare combination of pandemic, job loss, social and economic turmoil and growing awareness of racial inequalities .
The donation was also supported by the stock market rebound towards the end of the year. Foundations led the surge in donations, increasing their grants by 17%.
Personal donations – by far the largest source – increased by more than $ 7 billion. Top 10 donors donated nearly $ 22 billion, shedding light on a continuing trend in top-down philanthropy.
Despite this trend, 2020 has reinforced the fact that donors at all income levels are generous. It was heartening to see charities receiving numerous donations of $ 1,200 right after the stimulus payments were made, and year-end contributions of $ 300 (the amount of the Temporary Universal Deduction for Charities ). Yet to match MacKenzie Scott’s generosity, it would take nearly 20 million donations of $ 300.
Because philanthropy is healthier when it is most democratic, we need to work on policies that allow everyone to give generously – not just the rich.
Indiana University Lilly Family School of Philanthropy Research suggests that a permanent and larger charitable deduction for non-filers – $ 4,000 for single filers and $ 8,000 for joint filers – could increase donations to $ 17.4 billion and increase the participation of up to 7 million additional households.
Imagine the benefits to nonprofits, the communities they serve, and the fabric of our society.
The latest Giving USA report also shows that corporate pre-tax profits fell 3.5% and corporate donations fell 6.1%. At less than 0.8% of pre-tax corporate profits, this is the lowest measure of corporate giving in 40 years. We are far from 5% encouraged by the late Ken Dayton, whose family founded the Target stores.
Dayton believed that giving back 5% of pre-tax profits to businesses would increase public confidence in businesses while uplifting the communities served by businesses.
The unprecedented events of 2020 and philanthropic support for basic needs highlight donor priorities.
For example, donations to education increased 9%, boosted by support for academic research on the coronavirus and donations to HBCUs, which correlate with two of last year’s central driving forces: the pandemic and calls for racial justice. Sadly, arts and culture donations declined 7.5% at a time when the need for the healing and unifying properties of arts and culture was at its height. Donations to the arts have historically declined during economic downturns, only to grow stronger again with the economic recovery; now let’s hope for the same return to sustainability.
We are still in times of need on a bumpy road to economic recovery.
Generosity will continue to play a central role. The charitable response to the events of 2020 shows that philanthropy is resilient, and yet a flawed solution due to inequality of sources and distribution.
Healthy philanthropy results from a fair economic environment. As we celebrate philanthropists 2020, we also want to look ahead and work towards more equitable opportunities for donors and recipients.
Laura MacDonald, originally from Columbus, is President of the Giving USA Foundation and Director and Founder of the Benefactor Group. She has served the nonprofit sector for four decades, working with educational institutions, health, arts and culture organizations; women’s funds and more. Giving USA, the oldest and most comprehensive report of its kind, is published by the Giving USA Foundation and is researched and written by the Lilly Family School of Philanthropy at Indiana University.
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