Heroic efforts by nonprofits during the pandemic and racial justice reckoning of 2020 were supported by record giving levels that year. Now, charitable giving is on the decline in a way that threatens the very fabric of our society.
Remember the photos of lines of cars at food pantries serving those who had been furloughed or laid off? Or the many stories of nonprofits that adapted their programs creatively to new realities?
Donors gave generously to a diverse set of organizations: performing arts nonprofits that moved performances online—bringing joy to those feeling isolated as they quarantined, after-school programs that stepped up to creatively support young people to counter the loneliness they felt as schools went remote, racial justice-focused organizations seeking to reform our criminal justice system at a time when its weaknesses were on stark display, and countless nonprofits that morphed into whatever their communities needed them to be in an unprecedented time.
For a moment, it seemed like Americans understood, across ideological and other divides, the unique and invaluable role nonprofits play. Big foundations, companies, mega donors, and everyday givers alike stepped up.
This broad appreciation for nonprofits appears to have ebbed. Charitable giving slumped in 2022, according to a Giving USA report released last month, dropping a stunning more than 10 percent from 2021 in inflation-adjusted dollars. Meantime, nonprofits' costs increased as inflation spiked. This makes it all the more remarkable that, in a survey our organization conducted earlier this year, most nonprofits reported a budget surplus—and fewer than a quarter said they had a deficit—in the most recently completed fiscal year. This is a testament to the ability of nonprofit organizations and their leaders to deftly respond to a changing context, making necessary mid-course corrections and defying misguided stereotypes that nonprofits are not well managed.
Nonprofit organizations have continued their varied and vital work taking on the challenges that government and business cannot or will not: helping the most marginalized, protecting our wilderness and natural habitats, advocating for positive change. Nonprofits might not be in the news the way they were in 2020, but the stress on them continues, and will only grow more intense as giving decreases.
Almost all nonprofit leaders we surveyed indicated concern about staff burnout, with more than one-third of them stating it was "very much" a concern. "We have a solid culture and team, but burnout is real," one leader said. "Our challenge is balancing the health and well-being" of the organization with the pressing and urgent work.
Leaders described a range of contributors to burnout, including donor practices that continue to challenge organizations. One said, "It can be bewildering, frustrating, and even infuriating for nonprofit leaders to search for and secure funding ... leaders whose motivation is to improve the lives of their community spend so much time raising funds that they are often unable to make the impact they wish."
Staffing issues broadly—including capacity shortages and burnout, compensation and pay equity, and hiring and retention—are cited as the chief challenges by these leaders. They say they need more donations—especially unrestricted and long-term support.
We do see some encouraging evidence that foundations and individual donors are placing fewer restrictions on their gifts. More broadly, committed donors are showing more trust in nonprofits even as broad support for nonprofits appears to wane.
These committed donors are trusting more because they have seen up close the amazing work that so many nonprofits do, both in moments of crisis and every day. To spend time with frontline nonprofits, whether those helping young people reach their potential, or those seeking to combat climate change, is to be inspired. Seeing this work up close is an antidote to the negative stereotypes about nonprofits that have become all too common.
This appreciation of nonprofits is clearly not universal. Declining giving levels do not bode well for nonprofits'—nor for the people and communities they serve.
The drop in support for nonprofits should be seen as nothing less than a national crisis, but it has barely generated mainstream media attention. It is in everyone's interest, including business and government leaders, for this country to sustain the strong nonprofit sector that has been a historic, if underappreciated, source of strength.
The time to act to educate the public about the unsung nonprofits doing crucial work in every community, and the need to support them, is now.
Phil Buchanan is president of the Center for Effective Philanthropy (CEP) and author of Giving Done Right.
Elisha Smith Arrillaga, PhD, is CEP's vice president—research.
The views expressed in this article are the writers' own.
