Charitable giving increased in 2020 despite pandemic, IU research finds

Giving to U.S. charities increased 5.1% in 2020, to an estimated $471.44 billion, according to the Giving USA Foundation annual philanthropy report released Tuesday morning.

Adjusted for inflation, the number represents a 3.9% increase from the 2019 report.

The annual Giving USA report originated in 1956 and has been written and researched by the Indiana University Lilly School of Philanthropy at IUPUI for 20 years. It uses tax data, economic indicators, demographic information and other data to estimate giving to all U.S. charitable organizations.

Una Osili, associate dean for research and international programs at the school, said that the major takeaways from the research were the increases in generosity during the pandemic, as well as the innovation and resilience that not-for-profits showed to navigate the public health crisis and social climate of 2020.

A recovering economy that improved as the year went along helped boost donations, despite the challenges.

The stock market and personal incomes, two factors strongly related to giving, both grew as the peak giving season started.

“That allowed individuals who had financial assets, as well as foundations, to step up in terms of their generosity,” Osili said. “Many foundations were responding to this incredible need, and so we have this expansion of (need) but also a response to the need. In 2020 we had the racial justice movement, and we had a global health crisis.”

Giving tends to peak toward the end of the year for multiple reasons, Asili said. Not-for-profits typically hold outreaches and fundraising campaigns later in the year, and the holiday season places more emphasis on others in need. However, the most important reason comes from tax deadlines.

In the past, 30% of individuals itemized their charitable donations on their taxes to receive a tax deduction. However, with the passing of the Tax Cuts and Job Acts of 2017, that number decreased to fewer than 10%.

In 2020, the passing of the CARES act allowed those who didn’t itemize their charitable giving to receive a $300 tax credit. Even those who did not itemize giving on their taxes, but gave to a charity or foundation, were eligible to receive tax benefits.

Due to tax deadlines, Dec. 31 has historically been the day with the highest rate of giving.

The report divided giving into four sources: individuals, foundations, bequest and corporations. Giving in the individuals, foundations and bequest categories all rose, with foundations increasing the most, by 17%.

Giving by corporations declined by 6.1%, which Osili connected to the decrease in profit during the pandemic.

“2020 was an uneven year—there were some standouts in terms of high performances (from corporations), but there are also a number of sectors that are still recovering,” Osili said. “Some small businesses may not be in a position to give.”

The research found that giving to public-society benefit organizations had the largest growth in 2020, increasing 15.7%. The category included national donor-advised funds, United Ways and civil rights organizations.

Giving to arts, culture and humanities declined the most, by 7.5%. Giving to health care also declined, despite the increased attention put on the field due to the pandemic.

“That may seem a bit surprising,” Osili said. “But what we should emphasize is that giving to health is a large segment of the charitable sector. A lot of the gifts that were made, especially the larger gifts for COVID went into research and academic centers, which would fall under education, not health.”

She also mentioned certain health organizations had challenges due to fundraising events being reduced or eliminated due to the pandemic.