Why there’s hope charitable giving will remain strong despite bad economy

This month, Giving USA announced that nearly $450 billion was donated in the United States in 2019, setting a new baseline for philanthropy before the pandemic. Amid the wide-ranging turmoil and devastation from the COVID-19 pandemic and racial and social justice protests, there is a tremendous outpouring of generosity.

It has been inspiring to see contributions from people of all backgrounds — celebrities, athletes and citizens at all income levels. Philanthropy alone cannot meet the colossal needs caused by COVID-19 and fully address the urgent calls for racial justice. The government and business sectors have significant responsibility. Nevertheless, philanthropy has important roles to play in relief and recovery.

To date, the largest publicly announced donation is a pledge by Jack Dorsey, the CEO of Twitter and Square, Inc. His donations have focused on relief efforts to help with the economic and social impact of the pandemic. Michael Jordan and Jordan Brand have pledged $100 million to advance racial equality.  NBA star Stephen Curry and his wife Ayesha are using their platform to raise funds for Feeding America.

Virtual concerts have collected millions. U.S. foundations and corporations have given more than $11 billion to efforts to combat COVID-19, based on Candid’s estimates.  

Two pivotal questions emerge:

As the pandemic’s health, social and economic costs surge, will the initial generosity of donors continue and increase? Or will a precarious economy hold potential donors back from giving?

How can philanthropy — charitable giving, volunteering and public action by people from all walks of life — help individuals and communities weather this crisis?

Donors respond when needs are great

While the unprecedented nature of this pandemic defies direct comparison, recent data provide insights.

Our research shows that Americans respond generously to crises, and that the magnitude of a disaster is the top factor encouraging people to contribute. About two-thirds of U.S. households donated in response to major crises such as 9/11 and Hurricane Katrina.

A recent study found that people contributing to disaster relief in 2018 gave an average of $314, and that many donors provide disaster aid without reducing their giving to other charitable causes. Nearly 80% of households donating after 2017’s Hurricane Harvey did not cut back their support for other causes, and 12% increased it.

We have also studied the impact of economic downturns and recessions on philanthropy. During the Great Recession, charitable giving witnessed its most significant year-over-year declines on record. Total U.S. giving fell from $376.2 billion in 2007 to $349.4 billion in 2008. In 2009, charitable giving dropped to approximately $321.6 billion, a combined two-year drop of 14.6%, according to our school’s research for Giving USA and the Giving USA Foundation.  

Twitter and Square CEO Jack Dorsey is giving $1 billion to coronavirus relief efforts.
Twitter and Square CEO Jack Dorsey is giving $1 billion to coronavirus relief efforts.

However, research from the Philanthropy Panel Study demonstrates that although the percentage of households that gave to charity declined during the Great Recession, those that continued to give donated approximately the same dollar amounts as they had before the recession. 

The need for private philanthropy is rising rapidly, with many more people requiring services and support at the same time donors’ ability to give may be reduced. Many low- and middle-income donors are confronting uncertainty about their financial futures. Companies are facing diminished revenues. Foundations are seeing endowments fluctuate with shifts in the stock market.

Nevertheless, people are making contributions, corporations are donating and many foundations are increasing their grants. While giving varies from crisis to crisis, research demonstrates that, overall, Americans are generous, even in personally difficult times.

Gaps in safety net have been exposed

So, how can philanthropy and nonprofits channel this generosity and work with governments to alleviate the financial and emotional costs of this crisis?

First, the pandemic has exposed harsh racial, social and economic disparities and glaring imbalances in the social safety net. Private funders and nonprofits must help address the needs of the most vulnerable, including those who will bear the greatest impact from the economic fallout.

Second, the COVID-19 pandemic and the economic and social cascading effects call for innovation and partnership on a scale never before seen. Individuals, foundations and corporations can collaborate to mobilize resources and identify solutions. Donors can contribute to community-based emergency funds, coordinate efforts to avoid duplication and combine forces to address unprecedented health needs.

Efforts are well underway. Individual donors, including Nike CEO John Donahoe and his wife Eileen, are working with local governments, universities and private companies to scale-up testing and diagnostics and increase access to care. Several funders including MasterCard Impact Fund, Wellcome Trust and the Bill & Melinda Gates Foundation have jointly committed to help develop treatments.

Third, nonprofits and philanthropists must increase awareness and make it easier to give to charities of all types, many of which will need help to get through the crisis and continue to deliver their mission. Nonprofits must innovate, adopting virtual strategies, using technology to share their impact and providing options for donors to give online conveniently, securely and transparently.

Finally, philanthropy and nonprofits can help build trust, lift the voices of the marginalized and vulnerable, foster community and share reliable information. In this era of social distancing, nonprofits have a unique opportunity to use their social media platforms and virtual tools to strengthen equity and inclusion while engaging their donors and volunteers.

Philanthropy plays important roles during national and international crises. Americans have given generously of their money, their goods, their time, their talent and their testimony. The research indicates that America’s philanthropic spirit will once again rise to the challenge.

The need is enormous. But there is reason for hope.

Una Osili is associate dean for research and international programs at the Indiana University Lilly Family School of Philanthropy at IUPUI. Patrick M. Rooney is executive associate dean for academic programs at the school. They are both professors of economics and philanthropic studies at IUPUI.

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This article originally appeared on USA TODAY: Why bad economy may not crush Americans’ donations to charity

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