Photo by Sharon McCutcheon on Unsplash
By Lisa Cirincione, Senior Resource Development Associate at Joining Vision and Action
If you’ve been reading my blogs, you know that I have been concerned about how the Tax Cuts and Jobs Act of 2017 (TCJA) would impact individuals’ giving to nonprofit organizations. Thanks to the vigilant work of Giving USA, we now have some numbers to show what actually happened in 2018.
Who got more, who got less
First, the report shows that some types of organizations actually saw more money donated. Some of those organizations were those focused on international affairs—which saw a 9.6 percent increase in giving. Meanwhile, organizations that support animals and the environment saw a 3.6 percent increase in giving. 
However, we also saw certain types of organizations lose donations.
People donated less money to foundations, which saw a 6.9 percent decline in giving; public-society benefit organizations (i.e., organizations that work with voter education, civil rights, civil liberties, consumer rights, and community and economic development), which saw a 3.7 percent decline in giving; religious organizations, which saw a 1.5 percent decline in giving; and organizations focused on education, which saw a 1.3 percent decline in giving. 
Giving to all other types of organizations—human services; health; and arts, culture and humanities—remained flat or had a small decrease. 
On the bright side, giving by individuals is still the largest source of income for nonprofits. In 2018, individual donors gave an estimated $292.09 billion. 
What’s to blame?
I’ve written about what might be driving these changes before, but it bears repeating—1) the new tax policy, which removed the financial incentive to give by eliminating the charitable deduction for those who do not itemize, and 2) income inequality. The data from 2018 shows us that fewer people are giving at all, but the size of the gifts by wealthy people is making up for that decline, so the actual amount of money given to nonprofits is increasing. 
Let’s look at how this trend evolved. At the end of 1989, the top 10 percent of Americans had 61 percent of national wealth, and the bottom 90 percent had 39 percent. By the end of 2018, the wealth gap had grown much larger.  Last year, the top 10 percent had 70 percent of all the wealth in the United States, and the bottom 90 percent had 30 percent.
What it means for nonprofits
This consolidation of wealth is troubling for a number of reasons, but one that will impact nonprofit organizations, especially those that are smaller and working on the front lines of meeting basic needs, is that donors of modest means are not making—or are unable to make—charitable gifts. I’m sure you’ve seen stories about the astronomically expensive costs of housing, higher education and health care.
What the data shows us is that the number of people who gave in 2018 fell by 4.5 percent, while the acquisition of new donors fell by 7.3 percent.  Although the decline in the number of donors predates the TCJA, the elimination of the deduction for charitable giving may be exacerbating it.
Another concern sparked by today’s giving pattern is that as smaller donors disappear, charitable giving is becoming the domain of the wealthy.
Is your board exploring ways to appeal to the charitable inclinations of the wealthy?
In my next blog, I’ll take a look at corporate and foundation giving trends and how giving is shaping up in 2019.