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Go ahead — give a little.
Americans gave an estimated $427.71 billion to charity in 2018, Giving USA’s annual philanthropy report found this year, with total giving increasing 0.7% in current dollars over the previous year but decreasing 1.7% adjusting for inflation. The report, a joint effort by the Giving USA Foundation and Indiana University’s Lilly Family School of Philanthropy, highlighted a “complex” giving environment shaped by tax-policy changes and stock-market volatility.
A key shift, the authors wrote, was a decline in people and households itemizing different kinds of deductions on tax returns. “This shift came in response to the federal tax-policy change that doubled the standard deduction,” they said. The late-2017 GOP tax overhaul raised the standard deduction from $6,350 to $12,000 for single filers, and $12,700 to $24,000 for those married and filing jointly.
As you contemplate your own philanthropy this Giving Tuesday, you may wonder just how much hard-earned money you should be giving to charity.
Copia Wealth Management & Insurance Services CEO Elisabeth Dawson suggested shooting for a middle ground of 4%, citing a Financial Samurai figure estimating that the average percentage of adjusted gross income donated to charity — that is, gross income minus certain adjustments — is 3% to 5%.
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And Chronicle of Philanthropy editor Stacy Palmer, pointing to a statistic that individual giving as a percentage of disposable income has long hovered around 2%, advised starting there. Many people of faith, meanwhile, tithe 10% of their income.
Most agree on one point: Charitable giving is an incredibly personal choice. “It’s what you feel like you can afford, how much a particular cause or charity means to you, how deeply affected you are by something and how much you want to help, and what you feel your responsibility to a community is,” consumer psychologist and “Decoding the New Consumer Mind” author Kit Yarrow told MarketWatch. “It’s just a very personal equation that everybody works out for themselves.”
Factors that play into that equation, Yarrow added, might include your personal-financial constraints like credit-card debt and loans; how passionate you are about a certain cause, issue or institution; and whether you’ve actually been engaged by an organization or charity’s outreach efforts.
But while “we all have an obligation to contribute to others,” Yarrow said, that contribution doesn’t always have to be monetary. “This is particularly true for those that are struggling with their own debt,” she said, suggesting donating time or energy instead. Palmer noted that some people may choose alternate, more informal ways of giving, like helping family members or a needy person next door — acts, in other words, that “might be just as legitimate a way to help others as writing a check.”
As for pressuring others to give money, experts stress the difference between encouraging donations and guilting people. “Sometimes social media’s a good way to do it, because it’s a lot less direct than somebody calling me up,” Yarrow said. “(Or) a bulk email where it doesn’t feel like ‘Hey, Kit, you need to give.’”
“I think they can talk about what they’ve done and see if it positively affects someone else,” Dawson said.
Meanwhile, a 2017 Chronicle of Philanthropy analysis of IRS data found that the share of Americans who give to charity had declined: Just 24% of taxpayers reported a charitable gift in 2015, compared to the 30% to 31% norm from a decade earlier.
This trend — which, the Chronicle noted, jibed with similar studies — “suggests a narrowing of support in America for philanthropy.” “Whether running capital campaigns, annual-giving drives, or direct-marketing efforts, nonprofits are relying on fewer, more affluent supporters,” the publication’s “How America Gives” special report found. (Charitable billionaires Warren Buffett, Bill Gates and Melinda Gates, Michael Bloomberg and George Soros recently topped Forbes’ list of America’s top givers of 2018.)
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A separate analysis released last month by the Lilly Family School and Vanguard Charitable found that the share of U.S. adults donating to charity declined substantially from 2000 to 2016: While around 66% of Americans gave money to charity in 2000, that share sat at 53% by 2016. Having remained steady until the Great Recession, the participation rate began tapering off before reaching a “turning point” of decline in 2010.
One driver of this downturn may be Americans’ decreasing probability of identifying with any one religion or attending religious services, the authors suggested, as research shows very religious people are more likely to donate to charity.
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Once you’ve determined your own capacity to give, Palmer said, think first about which cause you’re passionate about, then do some research on which charities are doing good work in that area. You can find useful nonprofit reports on GuideStar; watchdogs like Charity Navigator and the Better Business Bureau’s Wise Giving Alliance also evaluate charities.
“Ask questions about what kind of accomplishments the nonprofit has achieved, and how do they know it?” Palmer said. “If they fumble around when you’re asking those kinds of questions, that’s not a good sign.” The best source of information is sometimes the charity’s own website, she added.
While the number of charities you support is an individual decision, you can often do more good by paring down the list and “really giving generously to the groups you care a lot about,” Palmer suggested, selecting two or three rather than 10.
And your continued contributions again and again are hugely beneficial to a nonprofit. “You can help them a lot by being a loyal giver,” she said.
This story was originally published Sept. 24, 2018, and has been updated.
