Adjusted for inflation, overall donations to charities fell in 2022 after peaking in 2021, and grew slightly in 2023, according to Giving USA's Annual Report on Philanthropy.

Inflation began to rise in 2021 and peaked in 2022, diminishing the power of each dollar spent and received by American businesses and consumers. The annual rate of change in overall costs of goods and services began to cool back down to historically normal levels only in the latter half of 2024.

The impact of inflation on charitable organizations has been twofold, discouraging donations from individuals, who feel they need to conserve cash amid higher costs, as well as diluting the net impact of donations.

That trend could be continuing into this year, according to estimates by the GivingPulse Q2 2024 Report published by GivingTuesday, an organization that supports the philanthropic movement. Its data shows that nonprofits will likely recover lost ground this year after seeing declining donations.

Giving USA has estimated that the biggest growth in 2023 donations came from "bequests," which occur when someone leaves a charitable gift outlined in their will. Foundations, public society benefit organizations, and educational charities benefited the most from this growth in donations.

Among the high-net worth and ultra high-net worth households surveyed by Windfall, donations to educational causes steadily increased since 1995. The analysis also revealed a sharp increase in donations from wealthy donors to human services over the past decade. This broad category of charitable causes includes child welfare, poverty, mental health, and substance abuse treatment, though the survey did not differentiate donation amounts to issues.  

Younger generations of Americans, who will become the next major donor class, are more likely to view philanthropy as an opportunity to donate their time and less likely as a vehicle to donate money or assets, according to researchers at Indiana University, particularly when compared to older generations driving current philanthropic trends.

Younger generations may also reshape the types of organizations that receive the bulk of charitable donations, by prioritizing issues like the environment and racial justice. They are less likely to donate to religious organizations, which as a sector, regularly draws in the largest sums of donation, even as overall donations fell in 2023.

The 2024 holiday season, however, could spell a welcome boon for charities.

Nonprofit marketing consulting firm Whole Whale projected that GivingTuesday, falling on Dec. 3, 2024, will net 11% more donations compared to last year. However, the organization acknowledged the difficulty in forecasting giving in the wake of a hotly contested election. As market growth accelerates and inflation slows down, doubled with a stable employment rate and increased consumer spending, donations may very well swell this season.

It would certainly be a relief for charities experiencing higher demand for their services and higher operating costs. With so many Americans struggling, those in a position to give back may feel moved by the spirit of the season.

Story editing by Alizah Salario. Additional editing by Kelly Glass. Copy editing by Sofia Jarrin.