New Developments in Nonprofit Giving, Trust, and Volunteerism

 

Charitable giving is returning to pre-pandemic levels, resuming the decline in the number of givers that began more than a decade before the pandemic. This comes from Independent Sector’s latest report, which compiled information from several databases that track charitable giving plus the U.S. Bureau of Economic Analysis.

Other key findings in the September 30, 2022, quarterly review of health in the nonprofit sector include:

  • Fewer people are giving. The amount of dollars available to nonprofits grew, but it is coming from a lesser number of givers. The largest decline in donors was among those who give less than $500, meaning charitable giving gains are due to donors contributing large gifts.
  • Sector salaries increase most at higher income levels: In the second quarter of 2022, nonprofit salaries increased the most in the upper-income categories, which may correlate with competition among nonprofits to recruit leaders.
  • Public trust in the integrity of nonprofits is down from 2020. Data shows there is a direct relationship between trust and the amount of giving and volunteering a group receives, and a decline in trust can have long-reaching implications. Another aspect is that institutional trust and financial security go hand in hand according to the data. When people are not financially secure, they tend to have less trust in all institutions, which affects giving and volunteering.
  • Volunteering remains below 2019 levels: The number of unique people volunteering is down 19% compared to before the pandemic, despite a significant increase in 2021.

What explains these developments? During the pandemic, many local organizations were acting in ways that were visible in the eyes of the communities they serve. With more normalcy returning, those opportunities may be resulting in less publicity and perhaps less motivation for people to be involved. Tax incentives for giving were also in place but have now decreased in number. Inflation may also be hitting donor giving, especially smaller donors. The study showed that the largest decline was in donors who give $500 or less annually.

The report offers ideas to help nonprofits keep donations up and volunteerism high. Remembering to include smaller-level donors in communications could be important as nonprofits look to maximize their efforts by focusing on larger donors. As this study shows, it is the smaller donors that are giving less, not the larger ones. Other ideas revolve around legal policy changes to reinstate the tax incentives for giving — still possible for the 2022 tax year. Another focus could be making sure the nonprofit is engaging in projects their donors care about, so they are motivated towards advocacy.

ECFA’s own research affirms that larger-gift donors are more likely to research an organization before giving, such as by going to ECFA.org/members (one of our most-accessed pages) and looking to see whether a charity is accredited with ECFA. Each ECFA member profile also provides an overview of the ministry or church’s finances. Especially during this time of economic fluctuation, ECFA’s integrity standards provide validation for our members and extra confidence to donors that they are supporting organizations that are good stewards of their dollars and time.

For more news affecting your ministry, go to ECFA’s collection of recent articles at ECFA.org/news.

 

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.