Americans so far this year are donating to charities at a slower pace than in previous years, following persistently high inflation putting a strain on people’s wallets, according to the Associated Press.
In a survey of charities, 70.5% anticipate a decrease or constant level of donations for 2023, following a similar trend in 2022 where total dollar donations declined by 3.4% for the year and 10.5% when adjusted for inflation, according to a report from the National Council of Nonprofits. Inflation peaked at 9.1% in June 2022 and has since remained persistently above the Federal Reserve’s 2% target, increasing 3.2% year-over-year in October.
Donations still have time to catch up to previous rates as charitable giving tends to pick up near the end of the year due to higher giving during the holidays and from individuals seeking tax benefits, according to the AP. Additionally, one of the biggest donating days of the year is Giving Tuesday, which falls on Nov. 28 this year and could help lessen the decline.
As economic forces dampen the discretionary spending ability of average Americans, wealthier individuals, those with a household net worth of more than $1 million or those who make more than $200,000 per year, are giving 19% more than before the COVID-19 pandemic, according to the AP. Due to the increase, wealthy individuals are making up a larger share of total donations as average American giving declines.
Happy @GivingTuesday! The vital work of America's #nonprofits relies on your generosity year-round. Prioritize responsible giving by verifying charities through the @IRSNews Tax-Exempt Organization Search Tool (TEOS) to ensure your contribution counts: https://t.co/4WNWfipqV5 pic.twitter.com/A4IC05njZ7
— National Council of Nonprofits (@NatlCouncilNPs) November 21, 2023
Americans are increasingly spending through their savings, holding only $687.7 billion cumulatively compared to over $1 trillion in May and nearly $6 trillion in April 2020, according to the Federal Reserve Bank of St. Louis. The declining savings have led to strong consumer spending that helped to maintain above-trend economic growth, with Gross Domestic Product reaching 4.9% year-over-year in the third quarter of 2023.
Americans have been increasingly relying on debt to pay for their everyday expenses, leading credit card debt to reach $1.08 trillion. The record amount of debt has resulted in a rising number of delinquencies, particularly on credit card payments and auto loans.
High inflation has also led to an increase in the volume of requests for food at many food banks across the country, exceeding levels reached during the COVID-19 pandemic at some.
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