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Charities Saw a Drop in Donations Last Year, But Why?

A new report just released by Giving USA, well regarded as the most comprehensive study on giving, shows that donations in 2018 are down an inflation-adjusted 1.7%, the first annual drop that the US has seen since the Great Depression.

The reason? Not because there aren’t great charities to give money to, but because actual individual people are donating less than they ever have.

Where Donations Are Up

A total estimated $427.72 billion was donated to US charities in 2018, a huge amount. While the actual dollar number is larger than last year when it is adjusted for inflation, it is 1.7% lower than in 2017. The economy in 2018 was relatively strong, with a 5% gain in personal disposable income and a 5.2% increase in GDP, so experts don’t think that is to blame for the downturn.

Corporate donations were up almost 3% in 2018, and foundation gifts to charity were up nearly 5%. So it isn’t companies not giving like they used to, and it isn’t foundations not donating big pieces or gifts to charities. The real issue is that people, actual individuals, did not donate in 2018 like they had been previous years.

The individuals giving to charity dropped almost 3.5% in 2018, which works out to be between 20 and 25 million households. That is a big number, and many charities rely not on large corporate donations that happen once a year but constant small giving from many individuals to run their charity properly. Experts think this drop is only the beginning of a trend that will continue into 2019.

Why Are People Not Donating?

There are several reasons, but most experts in the field think that the Trump administration’s new tax reforms are what is hurting them the most. The tax plan took effect last year, and it brings corporate taxes way down, but stops many Americans from qualifying for the charitable tax deductions they used to.

Those in support of the tax changes say that this is fine because the increased economic growth this would spur will more than make up for it, but the numbers in 2018 showed many did not see it that way.

Another potential reason? The uncertainty of the stock market towards the end of 2018. Turbulence with stock prices meant people were holding onto their money during the biggest ‘giving’ season, instead of donating it to places that could use it.

It is too soon to be certain, but experts expect this trend to continue as long as these tax changes are in effect. Just how much they will hurt charities in 2019 is unknown, however.

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