President and CEO of Philanthropy Roundtable Elise Westhoff recently submitted testimony to the Generosity Commission ahead of its final report set to be released in early 2024. The commission is a nonpartisan group of individuals from across the charitable sector whose mission is “to celebrate and support American’s spirit of generosity as expressed through giving, volunteering and civic engagement.” The Generosity Commission launched in 2021 as an independent project of Giving USA Foundation to “advance research, education and public understanding of philanthropy.”
Westhoff’s testimony covers recent trends in charitable giving as well as the challenges and opportunities facing the philanthropic sector. From highlighting how philanthropic freedom fuels American generosity to addressing troubling attacks on charitable givers, her testimony celebrates the diversity and innovation of the American philanthropic tradition that has improved lives and strengthened communities for hundreds of years.
Below is the first installment in a three-part series based on written testimony prepared for the Generosity Commission. To read part two, click here. To read part three, click here.
Jack Salmon, director of policy research at Philanthropy Roundtable, contributed to this testimony.
PART ONE: Philanthropic Freedom Fuels American Giving and Volunteering
My name is Elise Westhoff, and I’m the president and CEO of Philanthropy Roundtable, a community of principled, compassionate and courageous donors who are committed to advancing the values of liberty, opportunity and personal responsibility through effective charitable giving. For more than 30 years, the Roundtable has been dedicated to its mission of fostering excellence in philanthropy, protecting philanthropic freedom and helping our donor community advance our shared values. Through this work, our goal is to build and sustain a vibrant American philanthropic movement that strengthens our free society.
The fundamental belief that binds our donor community is that our values of liberty, opportunity and personal responsibility have a proven track record of improving lives. This is why the Roundtable’s work focuses on promoting America’s founding principles, creating pathways to opportunity for people from all backgrounds and supporting organizations that strengthen our communities.
The American spirit of generosity—exemplified by our nation’s longstanding tradition of charitable giving and volunteering—has played a critical role in U.S. history and is foundational to American civil society still today. Since America’s founding, voluntary association and activities dedicated to creating a positive social impact for others rather than benefiting oneself or one’s family has been a driver of progress and innovation in our communities. As U.S. philanthropy has grown and developed over the years, it has become a medium through which we express our principles and values as well as part of our society’s fabric that supports and uplifts those in need.
Nearly 200 years ago, Alexis de Tocqueville revered the thriving civil society made up of charities, religious organizations and voluntary associations he observed when he visited America. The generosity of charitable donors and volunteers is a vital lifeline for churches, educational institutions, poverty-relief organizations, health and scientific research organizations, the arts, museums, cultural institutions and so much more. The U.S. charitable sector is notably exceptional in comparison to other nations in terms of its remarkable success and vibrancy. According to one 2016 analysis, Americans donate three to nine times as much to charity (as a share of GDP) as Europeans do.
The scale of charitable donations and volunteering is equally impressive. In 2021, Americans gave $485 billion to charity, a new record driven primarily by individual donors, according to the Giving USA 2022 Annual Report. In addition to monetary donations, volunteering continues to be an indispensable component of American philanthropy. According to AmeriCorps, more than 60.7 million people formally volunteered with organizations between 2020 and 2021. In total, these volunteers served an estimated 4.1 billion hours with an economic value of $122.9 billion.
The importance of charitable activity became even more pronounced when the COVID-19 pandemic struck in 2020. A report by the Center for Disaster Philanthropy found that 25,118 gifts and pledges totaling over $15 billion were given during the first year of the pandemic—on top of the usual annual giving trends. The COVID-19 Therapeutics Accelerator received $198 million from nine gifts, while Feeding America received $126.7 million from 37 gifts. During the pandemic, we also saw a significant increase in the number of GoFundMe campaigns—17 GoFundMe campaigns each raised over $1 million in 2020 alone, for a total of $88 million according to one analysis. America’s Food Fund raised over $44 million through their GoFundMe campaign ensuring that the most vulnerable populations had access to food through the worst of the pandemic.
Another positive trend in charitable activity is the increasing generosity of younger generations in recent years, particularly charitable giving by the millennial generation. A special report on giving patterns by generation found that millennial households in 2022 gave 40% more on average to charity than they did in 2016. However, the same report found that older generations of Americans are becoming less generous. For example, boomer generation households, with their prime earning years now behind them, gave 12% less over the same period.
Troubling Trends in Giving Time and Resources
In fact, since the Great Recession in 2008 we have experienced a downward trend in households’ participation in giving. While roughly half of households make charitable contributions every year, this share has fallen from around two-thirds of American households at the turn of the century. Another worrisome trend in philanthropy is the collapse in middle-class giving. According to the Fundraising Effectiveness Project, there has been a significant decline in the number of one-time donors and donors contributing less than $500, with a 7% decrease in the past year alone. The drop was even more pronounced for donors giving $100 or less, which saw a decline of over 13%. Despite their smaller contributions, these low-dollar donors make up the majority of all charitable donors.
While high inflation has eaten away at gains in economic growth, it has also somewhat eroded growth in charitable donations. Total charitable contributions were up by 4% in 2021 compared to 2020, yet after adjusting for inflation, total giving remained relatively flat.
Another worrying trend is observed in volunteering patterns among Americans. Although informal volunteering (assisting others outside of an organizational context, including neighbors helping neighbors) has remained stable in recent years, formal volunteering rates declined from 30% in 2019 to 23% in 2021. Unfortunately, this is part of a longer-term decline in volunteering that goes back roughly two decades. It is important to acknowledge and attempt to tackle the decrease in Americans’ engagement with the charitable community. Volunteers across the nation collaborate with nonprofit organizations to offer essential services to individuals and communities, and this also creates indirect positive outcomes for the volunteers.
This piece is the second installment in a three-part series based on written testimony prepared for the Generosity Commission. To read part two, click here. To read part three, click here.