Three charitable giving trends in 2018 that could shape future policies
Year after year, more charitable giving happens in December than in any other month. This statistic shows how societal, economic, and cultural forces shape charitable giving and how understanding these forces can help us maximize charitable giving through policy.
While updating our individual giving statistics dashboard (PDF), compiled from several sources and reports, we noticed three important trends in charitable giving from 2018 that we’ll watch next year and beyond. (All the trends we describe here can be found on the dashboard.)
1. The share of noncash asset donations is increasing significantly
Noncash donations, which include appreciated assets like publicly traded securities, restricted stock, real estate, private equity, collectibles and artwork, and cryptocurrency, has sharply increased as a share of itemized contributions. The latest available IRS data from 2016 shows that noncash contributions totaled $79.5 billion, or 34 percent of all itemized charitable contributions, an increase from $49 billion in tax year 2014.
Some of this growth is likely connected to the increased use of donor-advised funds, which allows donors to set up funds at community foundations or charities, receive a tax deduction, and recommend how grants from the fund should be rewarded. Between 2016 and 2017, the reported value of contributions to donor-advised funds increased by $1 billion.
Why are donor-advised funds so appealing? Their main draw may be their capacity to help donors convert noncash investments into tax-effective charitable contributions.
2. More giving is happening at checkout
Cause-related marketing at the point of purchase, often referred to as checkout charity, is designed to make it easier for the public to donate small amounts, which in aggregate yield sizeable contributions for a target organization or cause. In 2016, Engage for Good reported that 73 of the largest checkout charity campaigns that it tracks raised more than $441 million, up from $390 million the previous year.
More than 66 percent of these transactions were less than $2. Notably, the highest-grossing campaign was through an online retailer, but brick-and-mortar big-box retail stores fared well in the mix.
Although these donations are likely a consequence of convenience and pressure rather than well-informed motivation, a growing proportion of campaigns encouraging consumers to round up to the nearest dollar provides some sense of how simplifying the process can encourage giving.
3. Other options for funding social change have not crowded out giving
According to the most recent study on high-net-worth philanthropy by US Trust and Indiana University, among the 7 percent of wealthy donors who participate in impact investing, 68 percent do so in addition to their existing charitable giving, and 28 percent do so in place of some of or all of their charitable giving, down from 34 percent in the previous report.
Looking at a broader sample than only wealthy donors, Good Must Grow reported that in 2017, 61 percent of consumers purchased socially responsible goods and services, down from 67 percent in 2016. Nineteen percent of survey respondents said they prefer purchasing socially responsible products over donating to charities, down from 22 percent in 2016.
Documenting and understanding these changes in donor behavior and the forces that influence them informs policies that have the power to monitor, discourage, or provide incentives for charitable giving.
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