Americans gave less money to charity last year, as inflation and a down stock market squeezed wallets

That’s according to Giving USA 2023: The Annual Report on Philanthropy for the Year 2022. The report, which is researched and written by the Indiana University Lilly Family School of Philanthropy, estimates total donations to charities by individuals, companies, charitable foundations and bequests (money left in people’s wills).

Charitable giving hit a record high of $516.65 billion in 2021. The decline in 2022 “is a rare occurrence; total giving has only decreased in current dollars three other times in the past 40 years: in 1987, 2008 and 2009,” according to a statement from Giving USA.

It’s not a coincidence that previous declines in charitable giving happened in years when there were stock-market crashes. Charitable giving in the U.S. tends to track with the year-end values of the S&P 500 index
SPX,
-0.76%
; research has shown there’s a statistically significant correlation between the two, the Giving USA report noted.

“Because stock market values are an indicator of financial and economic security, households and corporations are more likely to give when the stock market is up,” according to the report.

But on top of last year’s market declines, households were contending with soaring prices on everything from eggs to dry cleaning to daycare as inflation ran hot. Financial pressures shrank the share of disposable income that households donated to charity down to 1.7%. Over the past 40 years, households have given roughly 2% of their disposable income to charity. The high point was 2.4% in 2005, according to Giving USA.

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Human services nonprofits were particularly hard hit by 2022’s decline in giving. That sector saw an 8% drop in donations in inflation-adjusted dollars. The category includes nonprofits that serve people in need, including food banks, homeless shelters and youth and family service organizations.

“Declines in giving like those we saw in 2022 have a tangible impact on nonprofit organizations, especially those that rely on charitable dollars to support their daily work,” said Amir Pasic, the Eugene R. Tempel Dean of the Lilly Family School of Philanthropy. “Nonprofits and donors alike experienced the steady, negative impacts of inflation such as the growing cost of goods and high interest rates throughout 2022, and many of those challenges remain.” 

He added, “However, Giving USA’s historical data also provide a case for hope: We have seen charitable giving rebound from each decline.”

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