Charitable Giving

Individual giving as a percentage of disposable income has remained flat over the past forty years, rarely straying from a narrow range between 1.8 and 2.2 percent. In the past five years, it has declined, according to the new numbers in Giving USA, to 1.77 percent in 2021. (6)

Giving to nonprofit organizations peaked during the pandemic as donors responded to immediate basic needs. Overall, data suggests that giving is returning to prepandemic patterns in terms of the number of donors and size of gifts. The number of donors is declining but the size of the donation is increasing. During the pandemic, small donors chose to give to emergency causes they did not typically support. It is predicted those donors will revert to their pre-pandemic giving levels. (3)

Another financial giving tool greatly increased in usage during the pandemic, donor advised funds. A donor advised fund, or DAF, is a giving account set up by a financial institution or public charity that allows the donor to make a charitable contribution of cash, stock, real estate or other asset, receive an immediate tax deduction and then recommend grants from that fund over time. Donors can contribute to that fund as often as they like. Although the first DAFs were created in the 1930s, they were not recognized formally until the Pension Protection Act of 2006. They are the fastest growing philanthropic tool. They increased significantly during the pandemic in a strong stock market environment. This large asset growth then contributes to large increases in grantmaking from DAFs. In this one year (2020-2021) the value of DAFs rose from $167 billion to $234 billion, a nearly 40% increase in just 12 months. The number of DAF accounts also rose by 27.6%. The total number of grants from DAFs rose from $35 billion to $45 billion, a 28% increase in one year, and by more than 60 percent in the past two years. DAFs do not currently have any federal minimum payout requirement, unlike foundations that must meet the minimum distribution of five percent of assets in grants or grant related expenditures. (5)