Americans gave a record $471 billion to charity in 2020, amid concerns about the coronavirus pandemic, job losses and racial justice
- Written by: Anna Pruitt, Researcher and Managing Editor, Giving USA, IUPUI
A flood of donations to support COVID-19 relief[1] and racial justice efforts[2], coupled with stock market gains, led Americans to give a record US$471 billion to charity in 2020.
The total donated to charity rose 3.8% from the prior year in inflation-adjusted terms[3], according to the latest annual Giving USA report from the Giving USA Foundation[4], released in partnership with the Indiana University Lilly Family School of Philanthropy at IUPUI[5]. In contrast, total charitable giving only grew 2.8% in 2019 – a year of economic expansion and stock gains, we have found.
As two of the lead[6] researchers[7] who produced this report, we observed that giving bucked historical trends in three ways. The total increased despite a recession; foundations’ giving surged; and gifts to a variety of nonprofits providing social services, supporting people in need and protecting civil rights grew the most.
1. A good year for giving during a recession
Typically, giving declines or stays flat during recessions[8].
One reason why giving rose in 2020, even though the economy contracted[9], was that stocks notched gains[10] by the end of the year.
Economists have found that donors give more to charity when the stock market fares well[11]. But stocks usually decline during recessions[12].
2. Foundations and individuals stepped up
Soon after the COVID-19 pandemic began, many foundations pledged[13] to increase their grantmaking[14]. Based on our findings, it looks like they kept their word: Foundation giving rose 15.6% to a record $88.55 billion in 2020, after adjusting for the effects of inflation.
Strong stocks also bolstered giving by foundations[15], which support a wide array of charitable activities by making grants. They are required by law to annually give away 5%[16] of the average value of their assets, often held in endowments. As their stocks and other holdings grow, that 5% gets larger too.
Stock gains may have also boosted giving by American households, the source of about two-thirds of all charitable dollars, which grew 1% to set another inflation-adjusted record of $324 billion.
In particular, America’s billionaires became an estimated $1.2 trillion[17] richer in 2020.
While giving by the wealthiest[18] Americans – especially[19] novelist and philanthropist MacKenzie Scott[20] – often dominated the headlines, giving by individuals wasn’t limited to large-scale gifts. One report found that the total raised from gifts under $250[21] grew more than larger donations. Another study found that one-time online gifts[22] to organizations that provided COVID-19 relief grew by 41%.
At the same time, corporate philanthropy, which our colleagues in the past have found to be closely linked to economic performance and the profits companies earn[23], actually fell 7.3%. While certain industries, such as technology, grew in 2020[24], many others, including travel, hospitality and transportation, experienced losses.
3. Uneven experiences for different kinds of nonprofits
In addition to addressing the coronavirus pandemic and the unemployment spike it caused[25], American individuals and foundations responded to calls regarding racial justice[26].
Food banks, homeless shelters, youth programs and other organizations that meet basic needs, collectively known as human services groups[27], received an outpouring of support in 2020. Those donations grew 8.4%, in inflation-adjusted dollars, to $65 billion. This additional giving responded to the COVID-19 pandemic and the economic troubles it brought about, as well as broad calls for racial justice.
Giving to public-society benefit organizations[28] grew the most, a 14.3% increase to $48 billion. This broad category includes the United Way[29] and its local branches, which pool donations raised in workplaces, from corporations and other sources. It also includes donor-advised funds[30], accounts through which donors can direct gifts to charities, and community development financial institutions[31], private-sector financial operations that boost local borrowers. Civil rights and voting rights groups also fall into this category.
However, organizations that rely on in-person events and services – such as operas and museums, as well as charity walks, runs and other peer-to-peer fundraising events[32] that raise money to fight diseases – overall fared worse in 2020 compared to 2019. That could help explain the 8.6% decline in giving to the arts, culture and humanities sector as well as why giving to health-related organizations fell by 4.2% amid the pandemic.
In addition, some large gifts that funded COVID-19 research, such as the W.M. Keck Foundation’s $6 million in donations[33] to the University of Southern California, count as giving to education, not giving to health.
What’s more, all nine categories that we track received gifts slated for COVID-19 relief and racial justice causes.
We also feel it’s important to observe that more than half of all Americans responded to the upheaval of 2020 with an outpouring of generosity[34], which they expressed in many ways besides donating money to charities.
When physical distancing became essential, Americans went out of their way to buy meals-to-go to support local restaurants[35], paid their hairdressers[36] when their salons were closed and volunteered either formally or by simply helping their neighbors out[37]. In addition, many Americans gave directly to others[38] through crowdfunding platforms[39] and other apps, which are particularly popular for younger people and people of color. While our research focuses on giving to charities, these new habits may indicate a broader move toward generosity on the horizon.
Together with our colleagues, we will continue to investigate whether these new patterns will continue in 2021 and beyond.
[You’re smart and curious about the world. So are The Conversation’s authors and editors. You can read us daily by subscribing to our newsletter[40].]
References
- ^ donations to support COVID-19 relief (www.charitynavigator.org)
- ^ racial justice efforts (theconversation.com)
- ^ rose 3.8% from the prior year in inflation-adjusted terms (philanthropy.iupui.edu)
- ^ Giving USA Foundation (givingusa.org)
- ^ Indiana University Lilly Family School of Philanthropy at IUPUI (philanthropy.iupui.edu)
- ^ two of the lead (scholar.google.com)
- ^ researchers (scholar.google.com)
- ^ giving declines or stays flat during recessions (theconversation.com)
- ^ economy contracted (apnews.com)
- ^ stocks notched gains (www.kiplinger.com)
- ^ donors give more to charity when the stock market fares well (dx.doi.org)
- ^ stocks usually decline during recessions (www.investopedia.com)
- ^ many foundations pledged (www.macfound.org)
- ^ increase their grantmaking (www.commfoundations.com)
- ^ giving by foundations (www.cof.org)
- ^ to annually give away 5% (learning.candid.org)
- ^ $1.2 trillion (www.forbes.com)
- ^ giving by the wealthiest (apnews.com)
- ^ especially (www.wtoc.com)
- ^ MacKenzie Scott (theconversation.com)
- ^ gifts under $250 (www.philanthropy.com)
- ^ one-time online gifts (mrbenchmarks.com)
- ^ closely linked to economic performance and the profits companies earn (archives.iupui.edu)
- ^ technology, grew in 2020 (www.wsj.com)
- ^ unemployment spike it caused (www.bls.gov)
- ^ responded to calls regarding racial justice (apnews.com)
- ^ human services groups (www.charitynavigator.org)
- ^ public-society benefit organizations (www.guidestar.org)
- ^ United Way (www.missionbox.com)
- ^ donor-advised funds (theconversation.com)
- ^ community development financial institutions (cdfi.org)
- ^ peer-to-peer fundraising events (www.peertopeerforum.com)
- ^ $6 million in donations (www.wmkeck.org)
- ^ outpouring of generosity (theconversation.com)
- ^ support local restaurants (www.food.ee)
- ^ paid their hairdressers (fitadvisors.com)
- ^ helping their neighbors out (www.thelily.com)
- ^ Americans gave directly to others (theconversation.com)
- ^ crowdfunding platforms (theconversation.com)
- ^ You can read us daily by subscribing to our newsletter (theconversation.com)
