September 15, 2020; CNBC
A new report from the Women’s Philanthropy Institute (WPI) at the Lilly School of Philanthropy explores how men and women gave in response to the pandemic and how their existing giving changed during the early months of the crisis.
“The COVID-19 pandemic,” note the report authors, “is a complex crisis whose widespread social and economic impacts created an unprecedented environment for charitable giving during the spring of 2020. These conditions have greatly affected philanthropy, influencing whether US households give, how much they give, and to which causes and organizations they give.”
The report is based on a survey of 3,405 respondents conducted in the middle of May. The survey finds that 56.1 percent of US households had engaged in some form of charitable giving, even as only one in three (32 precent) gave to 501c3 organizations.
How does this occur? The answer is that the giving impulse extends beyond the nonprofit sector. Rather than give to a nonprofit, some respondents have chosen to aim their giving elsewhere. Sometimes it takes the form of mutual aid, but in whatever form it takes, it’s called “indirect giving,” and it’s a category fundraising researchers have always had trouble counting, though it’s a very real way of sharing one’s resources with community.
Under the circumstances of the pandemic, the study’s authors note this includes “ordering takeout to support restaurants and their employees” and “continuing to pay individuals and businesses for services they could not render” (such as, perhaps, by buying gift cards that might be usable for meals in the future). As the authors explain, 48.3 percent of US households gave in this form indirectly. The survey also finds a generational tilt to this indirect giving—58.4 percent of adults under the age of 30 gave in this fashion, compared to 40.1 percent of those over 65 years of age. Overall, 56.1 percent of households had given either through nonprofits or these indirect means or both.
As the report authors note, changes in how Americans give predate the pandemic. Writing in NPQ last year, the Urban Institute’s Shena Ashely wrote that “it would be a mistake to conclude from [declining nonprofit giving numbers] as some do—that fewer Americans are participating in charitable giving, since it does not capture person-to-person giving, which is another way that individuals express their charitable impulses.”
It’s clear that a pandemic also changes where people give. In past recessions, the survey authors note, basic needs giving increased while religious giving stayed flat and arts and education giving declined. Not surprisingly, this pattern is visible in the current economic shutdown, too: people who gave 31.4 percent of total gifts in 2019 report increasing donations in basic needs and health donations, compared to 15.4 percent who report reducing such giving. All told, the survey finds, “A slightly higher percentage of US households gave, and in slightly higher amounts, during the initial months of the pandemic compared with recent disasters.”
This is not to discount, however, the impact of the economic shutdown on the giving capacity of many. Overall, more US households said they were likely to decrease than increase their giving as a result of conditions present during the early months of the pandemic, in part due to uncertainty about the spread of the virus and further economic impacts. Single women were more likely than single men and married/partnered couples to decrease their giving, as single women were among those most severely impacted by the pandemic-induced economic shutdown.
The WPI study’s finding is similar to that obtained by the Fundraising Effectiveness Project’s 2020 First Quarter Report, which found that giving to charitable organizations was down by six percent in the first quarter of 2020 compared to the same time last year.
But nonprofits will feel the financial effects of the pandemic in more ways than just donated revenue, of course. For many, donated income is mixed with government contracts and or earned income, and those organizations will feel significant paint from the double or triple whammy they’re experiencing from their revenue mix and their programs’ viability. The YMCA is among the charitable organizations that have been hard hit, with revenue plummeting around $1.5 billion since March as facilities were closed for several months during coronavirus-related shutdowns. For some organizations, it will be almost impossible to recover.
United Way also anticipates donations will be lower for the remainder of the year. Middle-class individuals and households who have been economically harmed by COVID are United Way’s donors. These individuals were committing between $250 and $500 in donations per year.
This is an enduring crisis, as opposed to a one-hit disaster. “There isn’t a stop and an end.” As Jeannie Sager, director of WPI, shared with CNBC. “The scale of this is unprecedented.”
The survey authors caution that much remains unknown. As they write, “Due to the timing of the survey and the ongoing nature of the pandemic, the findings represent an early snapshot, rather than a complete picture, of households’ charitable giving in response to the crisis. While the pandemic is a global event, the findings are limited to the crisis in the United States.”
What year-end giving figures will look like in 2020, of course, remains to be seen. For instance, there’s likely to be even a greater bifurcation of giving proportions between the very wealthy and the rest. This trend will only be exacerbated by the pandemic, since billionaires have built significant wealth over this period.
Also evident is that, in addition to COVID-19, social, environmental, and political movements will impact charitable giving, too. Protests across the country call for charitable donations to bail funds and social justice organizations as well as to support Black-owned businesses. The presidential election is also in full swing, as are natural disasters like the raging wildfires in the western US. All of these events will complicate the full picture of 2020 and will surely affect how people prioritize charity during the pandemic.—Deidre Fraser and Steve Dubb