Charitable Giving Rose in 2018, But All May Not Be Rosy

February 22, 2019 — Charitable giving increased last year nationally, despite concerns that the new federal tax law would lead to decreased giving, a recently released report indicates, but a prominent Massachusetts nonprofit leader cautions that while donations to Bay State charities also appeared to increase in 2018, the new tax law is likely to negatively impact giving in 2019 and beyond.

In 2018, overall charitable giving in the United States increased 1.5% on a year-over-year basis, according to the 2018 Charitable Giving Report, released this week by the Blackbaud Institute for Philanthropic Impact.

Blackbaud said 2018 continued the longest sustained period of charitable giving growth since the last recession.

The new report confirms a report published earlier this month in which 54% of nonprofit fundraisers said they raised more in 2018, compared to 2017. The 2018 Charitable Giving Report includes overall giving data from 9,029 nonprofit organizations representing $31.9 billion in total fundraising in 2018, about eight percent of the $410 billion donated by 2017 by individual, foundations, bequests, and corporations.

Anecdotal reports suggest that total charitable giving in Massachusetts 2018 seems to have risen comparable to the national trend, said Jim Klocke, CEO of Massachusetts Nonprofit Network, the state's nonprofit trade association. But he expressed concern that many taxpayers will be unhappy to learn their 2018 charitable donations are not deductible.

Because total itemized deductions for middle income taxpayers will sum up to less than the federal standard deduction available to them, most, if not all, taxpayers in that situation will not deduct their charitable gifts. They will then perceive that their cost of charitable giving has increased and may decide to give less in 2019, Klocke said.

Those same donors also will no longer feel compelled to make yearend contributions, in order to deduct their gifts on 2019 federal tax returns, Klocke said, which could disrupt nonprofit fundraising plans and expectations for 2019 and 2020.

Several key trends continue to share charitable giving, Blackbaud noted: "First, charitable giving in the United States is returning to normal levels following two years of significant growth. Second, online giving is entering a new phase where mobile and other digital channels continue to change how donors engage with nonprofit organizations. Finally, giving to foundations and donor advised funds continues to grow in response to supporter preferences and changes in incentives."

Last week, Fidelity Charitable in Boston reported that its donors set a record last year, recommending $5.2 billion from their donor-advised funds, $700 million more than in 2017.

A donor-advised fund is a giving vehicle established at a public charity, which allows donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time.

According to Blackbaud, fundraising by large organizations, with annual total fundraising more than $10 million, was up by 2.3%. Medium-sized organizations, with annual total fundraising between $1 million and $10 million, had an increase of 2% on a year-over-year basis. Small nonprofits, with annual total fundraising less than $1 million, experienced a 2.3% decrease in fundraising results compared to 2017.

In addition:
  • Online giving grew 1.2% in 2018 compared to 2017, accounting for 8.5% of overall fundraising revenue, excluding grants. In 2018, 24% of online transactions were made using a mobile device.

  • Arts and culture organizations had the largest growth in total giving, up 5.5% during 2018, followed by animal welfare organizations (up 5.1%), and public and society benefit organizations (up 3.0%).

  • Overall giving to environment focused organizations dropped 2.9% last year.
The average age of charitable donors last year was 62, Blackbaud found.

The median donation amount for gifts above $1,000 in the U.S. was $2,049, while the median donation amount for gifts below $1,000 was $20.

The average online donation amount was $147.