US charitable giving hit record in 2021 but inflation looms

The Giving USA report says donations in 2021 were 4% higher than the record-setting $466 billion contributed in 2020. But they were down 0.7% when adjusted for inflation.

Many nonprofits are now feeling the strain because giving is not growing as fast as price increases, said Laura MacDonald, chair of the Giving USA Foundation. In response to the intense needs of the early COVID-19 pandemic, as well as the calls for racial justice, giving increased in unusual ways in 2020, but has generally returned to previous patterns.

“In 2021, many donors returned to their favored causes, with many of the sectors that struggled in 2020 making a recovery in 2021,” MacDonald said in a statement.

Giving to arts and culture groups, which suffered during the pandemic, climbed 27.5% in 2021 to more than $23.5 billion. Conversely, giving to education organizations, which saw increased donations during the pandemic to create virtual learning programs and new safety precautions for the return to schools, declined 2.8% to $71 billion in 2021.

“The environment for giving is evolving in multiple ways,” said Amir Pasic,dean of Indiana University’s Lilly Family School of Philanthropy, which researched and wrote the report published by the Giving USA Foundation. “Robust economic growth translated to strong performance by institutional forms of philanthropy such as foundations and corporations.”

But the report found that giving from individuals was essentially flat in 2021 when accounting for inflation, up 4.9% to $327 billion, still not near the peak of 2017 of about $342 billion when adjusted for inflation. Experts say those totals contradict proponents of the Tax Cuts and Job Acts, which passed in 2017, who claimed the legislation would increase giving.

Corporate giving also raised questions. Though it increased 23.8% to $21 billion in 2021, that was during a banner year for corporate profits, which were up 37% before taxes. The report says corporate giving still represents less than 1% of corporate pre-tax profits.

However, the report finds that donations are generally strong. Giving grew or stayed flat in eight of the nine major philanthropic sectors, with only education declining.

“The growth that we see for the majority of the subsectors in 2021 is a reminder of the resilience and innovation that help to drive the philanthropic sector,” said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy.

Associated Press coverage of philanthropy and non-profits receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.