The country’s economic situation seems to be changing by the moment. Inflation is high, interest rates are rising, and the surrounding uncertainty is provoking anxiety that has not been felt since the 2008 recession. Whether or not experts can agree on whether we are in or heading toward a recession, Americans are continually re-examining their spending, which can mean philanthropic giving in some sectors is the first expenditure to be cut. 

While there have been increases in charitable giving over the past three years, inflation has sapped its actual value. The picture for this year is unclear. It is highly possible that there could be a decline in giving similar to the Great Recession of 2008. The impact of a decline in giving at a time of inflation is two-fold: A decrease in dollars deployed, compounded with the effects of inflation fundamentally decreases the value of a philanthropic dollar. In this kind of environment, charitable organizations will need more to stay afloat and continue their missions. Philanthropists can prepare their giving to weather the storm of uncertain financial times by utilizing some strategic approaches. 

  • Take capital off the sidelines: The 2022 DAF Report by National Philanthropic Trust  highlighted that in 2021 there was an estimated $234 billion in charitable assets sitting in donor-advised funds, but the grants deployed from these funds accounted for just $45 billion, which is less than 20% of the total assets. DAFs have no federal minimum payout, and many philanthropists have assets sitting idle in them. Donors should look at their philanthropic portfolios to identify areas where unlocking this sidelined capital can have an impact.  
  • Partner with others: It is important to remember that you are not alone in your philanthropic endeavors. Funder collaboratives are a valuable tool for making impactful philanthropic investments. Collaboratives not only lower the financial burden on individual philanthropists, but they also build community across funders and recipient ecosystems. BD2, a $150M funding collaborative created by three philanthropic families to support breakthrough discoveries for thriving with bipolar disorder, is a strong example of philanthropists partnering for the greater good. Partnering embodies the African proverb, “if you want to go fast, go alone; if you want to go far, go together.”  
  • Consider diverse funding vehicles: How a philanthropic dollar is deployed can significantly impact that dollar's value. Selecting funding vehicles that can effectively deploy capital to accomplish your goals is vital. Fortunately, philanthropic funding vehicles have become nimbler and more diverse over the past decade. We have seen an emergence of giving using vehicles from both ends of the spectrum, with large trust-based gifts on one end and venture philanthropy investments on the other. Every field has unique philanthropic needs, so considering how your dollar can be the most effective is essential to strengthening your philanthropic efforts.  

Weathering financial uncertainty can be anxiety-inducing, but this moment in time is an opportunity, too. It should inspire philanthropists to solidify their commitment to support the social good. Now is the time for donors to lean into their philanthropic strategy and consider how they can strengthen their practices. Think of philanthropic giving like investing in the stock market: Look for what the return on investment will be in several years, not what it will deliver tomorrow.