Tue Jun 15

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.

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