Giving Compass' Take:

• Shena Ashley explains the sustainability and legitimacy implications of the decline of individual donors for foundations. 

• How can donors and foundations work together to support the social sector? 

• Learn more about the power of individual donors. 

The steady decline in the proportion of Americans who report making donations to charitable organizations is gaining more attention in the nonprofit sector, but it has yet to surface as a concern in private foundation spaces. The topic did not appear on any of the agendas of the major learning conferences for foundation staff this past year, hosted by groups like the Council on Foundations, Grantmakers for Effective Organizations, and Grantmakers in Health. With twenty million Americans having decided between 2000 and 2016 to stop contributing directly to charitable organizations, there should be concern not only for what this shift means for charitable organizations that depend on contributions from individuals to support their mission, but also concern among foundations. After all, foundations are themselves dependent on a healthy and thriving charitable sector to sustain the impact of their grantmaking and broad public confidence in charitable giving, as an underlying factor in their claims for legitimacy.

Although the apparent lack of awareness of or interest in this important trend is stunning, it is, to be fair, easy to miss the message of declining participation, when top-line messages in the media and in sector reports focus almost exclusively on the record high levels of charitable giving. According to the 2019 edition of Giving USA, giving by individuals totaled an estimated $292 billion, which represented a slight (and expected) decline from 2017 levels, but was still the second-highest amount in nominal dollars on record. Add to that the nearly $76 billion in foundation grants, the nearly $40 billion in bequests, and the $20 billion in giving by corporations, for a total of giving by individuals and organizations that reached over $427 billion in 2018. This paints a picture that is far from a crisis situation, even though the spread of this high level of giving is experienced unevenly across subsectors and organizations. However, these top-line figures that focus on the total levels of giving mask important and significant shifts in who is doing the giving.

What issues are raised for foundations when low- and middle-income donors are choosing to direct their donations in places other than charitable organizations? Two issues come to mind that reflect the complex interplay between individual and institutional philanthropy. The first relates to program sustainability and the desire of foundations to see that the work they support through their grants continues beyond the grant cycle. The second relates to the legitimacy of foundations and the reliance that foundations have on a general norm around charitable giving to underpin public support for the privileges they receive under the tax code.

Read the full article about the decline in individual donors by Shena Ashley at Nonprofit Quarterly.