Are we actually in the middle of a generosity crisis?

Did you donate to charity in the past, but no longer do so? 

If the answer is yes, you’re not alone. For the second year in a row, the philanthropy research foundation Giving USA reported that fewer Americans are donating to nonprofits than they used to, and the total amount of giving is declining once inflation is taken into account.

Some in the philanthropy world are calling it a “generosity crisis” — fewer than half of American households now give cash to charity. Twenty million fewer households donated in 2016 than in 2000. And the money that is being given is increasingly coming from a small number of super-wealthy people.

The only surprising thing about these findings, to me, though, is that anyone would be surprised.

Why aren’t people donating to nonprofits?

One big, and rather intuitive, reason why fewer people are donating money to registered nonprofits these days is the general state of the economy. The number of donors started sharply declining right around the tail end of the Great Recession in 2010. Of households that stopped donating money to nonprofits between 2000 and 2016, most earned less than $50,000 per year.

Young people are also less likely to donate to registered charities than older people. The relationship between age and willingness to give away money makes sense — the younger you are, the fewer years you’ve had to earn money. 

But the age gap has grown over the past few years. In part, this can be explained by high costs of living, student loan debt, and inflation. “Younger donors simply don’t have money right now,” said Rasheeda Childress, a senior editor at The Chronicle of Philanthropy.

But we can’t blame the economy for everything. The decline in organized religion might be the biggest factor in the decline in charitable giving. 

Religious institutions are major hubs of philanthropy — highly religious adults volunteer nearly twice as much as other adults in the US, and roughly half of them volunteer through a religious organization. A report by the Do Good Institute, which conducts philanthropy research at the University of Maryland, found that people who belong to community groups, religious or otherwise, are more likely than others to volunteer and donate money. 

It’s not that religion necessarily makes people more charitable. Community does — specifically, community where charitable giving is centered and expected. But as participation in organized religion declines, so does giving.

Beyond religion, people seem to be losing faith in institutions — the government, the media, and nongovernmental organizations like nonprofits

Nonprofits are one of the most trusted institutions in the US, but only about half of Americans have faith in them. Political polarization may be partially to blame — organizations that are colored by partisan values, like religious organizations and civil rights groups, are less trusted than nonprofits focused on more bipartisan issues like wildlife conservation. 

For Nonprofit Quarterly, Ruth McCambridge speculated that, as the gap between rich and poor gets wider, people are more likely to view nonprofits as “compliant handmaidens to an unjust system.” It’s not that people are less generous, it’s because they don’t trust organizations that cater to the rich donors they depend on, McCambridge added.

At the same time, a survey of over 2,100 adults in the US found that, of those who stopped giving to charity over the past five years, 47 percent said that they chose to stop donating because they believed wealthier households should be pulling more weight.

Historically, reaching out to small-dollar donors has not been an effective use of time for nonprofits, even though many nonprofits — particularly those in less affluent communities — depend on recurring small donations to stay afloat. Why pour energy into persuading 10,000 people to donate $10 each, when you could get all $100,000 from one wealthy donor?

“It’s almost becoming a self-fulfilling prophecy,” Childress said. By catering to the wealthy, nonprofits are “going after where the money is right now, but they’re not growing where the money is going to be.”

The charitable tax deduction system was literally designed to benefit the rich. If you don’t earn a lot of money, claiming charitable donations doesn’t make much sense, especially after former President Trump’s tax cuts in 2017 reduced the need to itemize deductions.

A totally reasonable reaction might be, “Who cares? Rich people have money to spare. Let them pay for everything!”

But if we let rich people dominate philanthropy, we give them the power to shape how nonprofits operate. “You don’t want to be beholden to anyone,” said Phil Buchanan, president of the Center for Effective Philanthropy and author of Giving Done Right. If an organization that ought to be grounded in generosity and community is visibly propped up by a handful of billionaires and corporations, it’s not a great look. 

If donors are not immersed in the community an organization is trying to serve, they’re less likely to understand what that community really needs. And centering the wealthy certainly doesn’t convince already-suspicious young middle-class adults to get involved.

How can we measure generosity if the IRS doesn’t know about it?

The Generosity Commission, a nonpartisan team led by The Giving Institute and Giving USA Foundation, has spent years trying to figure out where all the non-wealthy donors have gone. “There’s certainly a monetary giving crisis,” Childress said. But “if you look at the data, people are being generous” — just not in ways that we’re familiar with.

In other words, the apparent “generosity crisis” may not be a crisis of generosity at all. 

Measuring generosity is a bit like measuring “happiness” or “loneliness” — weird. Trying to nail down a feeling with statistics requires quantifying something that can’t really be quantified. Inevitably, the final score will be an imperfect reflection of the feeling, heavily skewed by what’s possible to measure.

Today, measuring cash donations to registered charities is relatively simple. These gifts are reported to the IRS, leaving behind a paper trail that can be tracked by organizations like Giving USA. A 2020 study conducted by the Stanford Center on Philanthropy and Civil Society found that people in the US give in ways that extend far beyond tax-exempt donations to nonprofits.

These forms of giving are harder to trace, though. When I gift a guitar to my neighbor who wants to teach his kid to play, for example, there’s no official record of that transaction — just a couple Facebook comments and a face-to-face conversation. The IRS can’t trace it, so in the eyes of Giving USA, it never happened.

Mutual aid — or the reciprocal exchange of resources within a community — has existed worldwide for thousands of years. But it entered the spotlight in the US during the pandemic through community fridges, child care collectives, and healthcare funds. 

For a population that increasingly distrusts political institutions and craves human connection, mutual aid can feel more impactful than donating to a nonprofit — whether it really is or not. A survey conducted by GivingTuesday, the organization behind the post-Thanksgiving global day of giving, found that 76 percent of respondents between 18 and 34 prefer to give directly to individuals in need, and not nonprofits — only 46 percent of those over 50 agreed.

Donations raised through crowdfunding also grew 33.7 percent in 2022, with 6,455,080 crowdfunding campaigns launched across the world that year. The crowdfunding market is projected to grow to as much as $300 billion by 2030. But while a GoFundMe donation counts as “generous” in my book, Giving USA can’t track it — so, we have a “generosity crisis.”

But we know that humans, for the most part, are generous. In 2022, the Charities Aid Foundation found that 4.2 billion people — 72 percent of the world’s adult population — gave money, time, or service to someone they didn’t know that year.

Over the past several years, the Generosity Commission has been working to “tell the full story” of generosity, so nonprofits can better understand how people want to make their communities better. Their full results should be published later this year.

So, what should we do? 

To be clear: nonprofits do a lot of good, both in the US and abroad. Especially in smaller, less affluent communities, they absolutely depend on normal, not-super-rich donors like me — and we’re not pulling our weight.

One could argue that, because I am, temporarily, a member of the richest 1 percent of the world’s population, I am morally obligated to donate a portion of my income to charity. At least in theory, if I schedule recurring donations to highly effective charities, I could save a number of lives in nations where my money will stretch much farther than it can in the US. 

But such effective philanthropy has always been the exception — in fact, giving to international causes actually declined by 1.6 percent after inflation in 2023. The vast majority of charitable giving in the US is domestic. Most donors aren’t paying for malaria-preventing bed nets overseas — they’re mainly donating to Ivy League schools and religious organizations. Just this week, Michael Bloomberg donated $1 billion dollars to Johns Hopkins University to pay for med students’ tuition. 

If I were in med school, I’d be thrilled — student debt sucks. But med students, especially from prestigious schools like the No. 2 ranked Hopkins, generally go on to make loads of money. Helping them out is less effective than, say, sending $1 billion dollars to directly help flood survivors in Kenya

Personally, I don’t currently donate a portion of my income to registered nonprofits, highly effective or otherwise. I’m still earning back the savings I drained as a freelance journalist (after spending six years on a grad student stipend). Michael Bloomberg didn’t pay for my Ivy League education, and with tens of thousands of dollars in undergraduate student loan debt hanging over my head, I laugh every time I receive, and promptly delete, a fundraising text from my alma mater.

But I do give. I regularly support Kickstarter campaigns, gift household items to my neighbors, and donate to a mutual aid fund supporting sex workers in my community. That makes me like other “zillennials” in my cohort, who tend to direct their money toward more informal charities than traditional nonprofits. That may not necessarily count in the IRS’s statistics, but I don’t think it’s fair to call us ungenerous.

Given the current state of democracy writ large, it makes perfect sense to me that so many of us value direct, tangible impact over indirect measurements of “effectiveness.” Informal community-centered giving can feel more impactful, even if it doesn’t score as high on a utilitarian scale. And what giving within your community can do — whether in the form of cash, time, or stuff — is build connection at a moment when we need it more than ever.

Middle-class people aren’t unwilling to give. They just seem to be giving differently, and philanthropic organizations are still figuring out how to measure charitable giving beyond tax-deductible donations to 501(c)(3) nonprofits.

Whether channeled through money or not, people perform acts of kindness all the time. Hopefully, the philanthropy sector will start to see them.

A version of this story originally appeared in the Future Perfect newsletter. Sign up here!

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