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May 12, 2021
 
Charitable Giving Grew 10.6% Last Year, Despite the Pandemic
Fundraising Up

March 18, 2021 — Despite concerns that the COVID-19 pandemic would depress donations to nonprofits, giving in the U.S. in 2020 increased from 2019 by 10.6%, with the overall number of donors growing by 7.3%, according to a newly released report.

Significant increases were seen at all levels of giving, with smaller gifts (less than $250) leading the way, growing by 15.3% compared to 2019, according to the Fundraising Effectiveness Project, a collaboration among fundraising data providers, researchers, analysts, associations, and consultants.

Larger gifts ($1,000 or more) increased by 10.4%, while mid-level gifts ($250 to $999) improved by 8.0%.

While the number of new charitable donors increased by 7.6% last year, compared to 2019, donor retention remains an issue for the sector, with retention dropping by 4.2% during the same period.

“American generosity remains incredibly strong,” said Mike Geiger, president and CEO of the Association of Fundraising Professionals, which helped develop the report, based on input from 2,496 nonprofit organizations across the U.S.

He added, “After the first quarter of the year, when giving dropped 6% and the impact of COVID-19 was just beginning, many of us were very fearful about how giving would fare throughout 2020, especially as events like natural disasters can often lead to dips in overall giving for charities not involved in relief efforts. However, 2020 giving has outpaced 2019 contributions ever since and ended very strongly, led by huge increases in smaller-level gifts.”

Helping to boost overall giving in 2020 may have been the universal charitable deduction, instituted by the CARES Act last year to help mitigate impacts of the coronavirus pandemic, which allowed individuals or married couples filing jointly to deduct $300 from their federal tax return, for charitable contributions whether or not they itemize or take the standard deduction on their taxes.

The universal charitable federal deduction increases to $300 per person this year, so a married couple filing jointly can deduct $600 on their 2021 tax return ( to be filed in 2022). The deductions must be in cash. including checks and credit card payments, and given to a 501(c)(3) public charity.

The 7.3% increase in the number of donors overall last year was led primarily by an extraordinary 18.5% increase in new donors and a strong 13.7% increase in recaptured donors (those persons who had given previously to the charity before 2019, did not give in 2019, and then gave in 2020), according to the Fundraising Effectiveness Project.

The drop in donor retention levels could foreshadow potential long-term challenges for most charities.

Tim Sarrantonio, head of partnerships and business development at Neon One, said that “even if we still saw a lot of shifting of donors and giving because of the pandemic, dropping retention rates mean charities are in for difficult funding problems in the future unless they have consistent major donors. And that’s not a tenable situation for most charities.”

The overall 2020 donor retention rate was 43.6%, a 4.1% drop from the 2019 rate of 45.4%. The chief factor in the decrease was a 9.2% drop in the new donor retention rate (the percentage of donors who gave in 2019 to a charity but didn’t give to the same charity in 2020). The 2020 new donor retention was 19.2%, meaning that less than one in five donors who gave for the first time in 2019 to a charity didn’t give to the same charity last year.

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