Inflation Hasn’t Yet Created Any Marked Shift in Donor Behavior

Inflation and a possible economic recession haven’t yet influenced giving patterns but are likely to do so soon, according to a July 2022 article in the Chronicle of Philanthropy. While the pandemic led to near-record philanthropic giving, fundraisers expect the current economic environment will lead to reduced donations soon.

As finances tighten due to ongoing inflation and the rising cost of living, donors tend to be pickier. They can react by reducing some of their donations and the groups they donate to. They may also look to obtain more value from their contributions by ensuring that those groups receiving their funding are providing worthwhile and valuable ministry for their dollars. Complicating the situation with the economy in the upcoming mid-term elections, some donors are expected to divert funding from charities into political organizations.

The 2022 drop in the stock market is also a big concern for fundraisers. Gifts of assets, a popular way of giving recently, typically come in the last quarter of the year, and this year may be lower due to stock market volatility and value. Those assets have also become less reliable for groups holding those assets. Charitable gift annuities also fall into this unreliable column due to stock market fluctuations and the permanence of this type of account in an unpredictable economic timeframe.

Nonprofits also feel the pinch from the reduced buying power of those incoming dollars. Even if the donations received do not decrease, that still indicates a decrease in the budget due to the increased costs of everything from materials to utilities to personnel. Inflation can also hurt their volunteers as people cut back on travel and may work more hours with less to devote to other interests.

Meanwhile, the current economy has created more demand for the help that nonprofits provide. Some nonprofits are examining and changing their fundraising strategies to keep donations flowing. Some reported changes are reducing their “ask” amounts, reducing the number of times they “ask,” and giving donors more transparent information on how their donations are used, focusing on the value of those given dollars.

For related resources from ECFA, see “New Frontiers in Nonprofit Fundraising” and various eBooks, including “10 Essentials of Budgeting” and “9 Essentials of Cash Reserves.”

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.