Middle-Class Philanthropy Is Collapsing

E ight in ten U.S. adults are anticipating that 2023 will be a difficult economic year due to higher taxes and a growing government deficit, compared to only 21 percent who believe it will be a year of economic prosperity, says a new Gallup poll released this month. What does this mean for charitable organizations and the communities they serve when Americans are feeling the pinch?

First, some good news. Big-ticket philanthropy remains robust. Foundation giving has grown in ten of the last eleven years and accounted for 19 percent of total giving in 2021, according to Giving USA. That amounted to the largest share on record.

But there are worrisome signals in giving among middle-class Americans. While these trend lines have been noted for many years now, they have worsened during recent economic challenges resulting from the Covid-19 pandemic and inflation being at a 40-year high. Adding more fuel to the fire is the very real possibility of a recession in 2023, putting even more pressure on middle-class households to prioritize bread-and-butter purchases over charitable giving.

In a recent report, the Fundraising Effectiveness Project (FEP) noted a “collapse” in the number of one-time donors and donors giving less than $500, down 7 percent in the last year alone. For donors giving $100 or less, the drop was even more dramatic at more than 17 percent. These small-dollar donors are not insignificant — they account for almost 98 percent of all givers.

As the Chronicle of Philanthropy points out, the FEP report underscores a decade-long trend in weakening individual support for charities. And it’s not the only recent analysis to show a drop-off in such giving. A study released in June by the Indiana University Lilly Family School of Philanthropy showed that the share of American households donating to charity declined from 66 percent in 2000 to 50 percent in 2018.

We’re in the middle of a sea change in philanthropy in which our nation is losing the small givers who support the local food pantry, YMCA, or library. The big philanthropies are giving more, but these funds tend to flow to major medical centers, museums, and similar large-scale institutions.

What are some of the reasons for the decline in individual giving? Economic considerations certainly play a role, but other factors are bigger. As the Lilly Family School of Philanthropy study concludes, “Just one-third of the decrease in charitable giving participation from 2000-2016 can be directly attributed to shifts in income, wealth, and homeownership, suggesting that factors such as decreases in interpersonal trust, empathy and compassion, among other factors, also may play a role.”

One culprit is a slide in religious giving, with 46 percent of households giving to religious causes in 2004 but just 29 percent doing so in 2018. As more and more Americans stray from membership in religious denominations, overall charitable contributions decline.

There is also a youth problem. Collectively, we are doing a poor job inculcating a culture of philanthropy in the next generation. Research has found that young people tend to donate and volunteer less than previous generations. Growing up Catholic, I recall the mite boxes where we deposited our pennies during Lent and then returned the boxes at Easter. Those types of lived generosity experiences are becoming less and less common in our families.

Now is not a time when people have ample discretionary income to spend on charity. And once you fall out of the giving habit, it can be hard to get back into it.

What can be done to reverse these trends? First, in an age of mega-sized philanthropy by the likes of MacKenzie Scott, Melinda French Gates, and Elon Musk, it’s crucial to remember that all gifts — regardless of size — matter to community-based nonprofits. It’s important to focus on the nonprofits in your local community that regularly and faithfully serve your neighbors. These are the lifeblood of civil society.

Second, monetary gifts matter, but we can also consider nonfinancial support and volunteer opportunities. Consider contributions such as participating in one-day clean-up projects, serving on an ad hoc committee, or committing to nonprofit board service. Donations of time and talent will make a difference.

Whether you care about supporting America’s veterans, providing better education for kids, or tackling poverty in your community, there are thousands of organizations around the country doing work that’s needed now more than ever. I hope each of us will consider how we can become more involved in our nation’s unique and powerful tradition of fostering a strong civil society.