During a recent webinar, New Administration: How Nonprofits Can Survive and Thrive, I uncovered some shocking numbers about the decline in individual giving—numbers that have largely gone unnoticed in the nonprofit sector.
Using Giving USA 2024 and IRS Statistics on Individual Tax Returns, I discovered a massive decline in individual donations that could have long-term consequences for fundraising.
The Stark Reality: Individual Giving Has Plummeted
Let’s break down the numbers:
- 2021: Individual giving totaled $439.11 billion (inflation-adjusted).
- 2022: Donations dropped to $386.76 billion—a $52.35 billion decline.
- 2023: Giving declined further to $374.40 billion, marking a total drop of $64.7 billion from 2021.
In other words, more than $100 billion less was donated by individuals in 2022 and 2023 combined compared to 2021.
Why Was 2021 a High Year for Fundraising?
A combination of economic and policy factors contributed to a strong giving year in 2021:
- Large-scale government stimulus measures put more disposable income into circulation.
- The post-pandemic recovery led to temporary increases in consumer and donor confidence.
- Inflation had not yet surged, meaning purchasing power was higher.
- Americans donated 2.1% of their disposable income to charity.
By 2022 and 2023, economic conditions shifted, impacting charitable giving.
Inflation and Disposable Income: The Key Factors Behind the Decline
As inflation rose, the percentage of disposable income given to charity slightly declined:
- 2022: 2.0% of disposable income was donated.
- 2023: 1.9% of disposable income was donated.
Even a small shift in giving habits, combined with rising costs, resulted in a massive drop in total donations.
Economic Uncertainty: What’s Next for Nonprofits?
While inflation appears to be stabilizing, nonprofits still face challenges:
- Potential changes in tax policy could affect donor incentives.
- Budget and spending adjustments at federal and state levels may impact nonprofit funding.
- Shifts in donor behavior due to economic uncertainty could persist.
The Baby Boomer Factor: A Looming Fundraising Crisis?
One often-overlooked factor is the aging Baby Boomer generation—a group that has driven economic and philanthropic growth for decades.
- The oldest Boomers will turn 80 in 2026.
- The youngest Boomers are already 60.
- 36% of Boomers have already passed away.
As Boomers age, their giving habits change, and the next generations are not as large or charitable (yet). This demographic shift could lead to a long-term decline in donations unless nonprofits adapt now.
How Nonprofits Can Prepare for the Future
1. Strengthen Your Annual Giving Programs
Investing in younger donors is critical. While Millennials and Gen Z may not give as much today, engaging them early can secure future support.
2. Go All-In on Planned Giving
With Boomers aging, planned giving is more important than ever. Over the next 10 years, expect historic levels of wealth transfer—but only nonprofits with strong planned giving strategies will benefit.
2A. Go All-In on Planned Giving (Intentionally Repeated!)
Yes, we’re saying it again. Planned giving is that important. Over the next 10 years, expect historic levels of wealth transfer—but only nonprofits with strong planned giving strategies will benefit.
(If you’re wondering why this is here twice—it’s because it’s that crucial. Ignore it at your own peril.)
3. Diversify Your Fundraising Efforts
Relying on individual giving alone? That’s like playing Monopoly and hoping you land on Free Parking every time.
Instead, diversify:
- Seek corporate partnerships.
- Leverage major gifts.
- Double down on digital fundraising.
Final Thoughts: The Time to Act is Now
The $65 billion drop in individual giving is not just a temporary trend—it could signal a long-term shift in philanthropy.
Nonprofits that take proactive steps—investing in annual giving, planned giving, and diversified fundraising—will be best positioned to weather the storm and thrive in the years ahead.
