by David P. King, PhD

In the most challenging of years, Americans persevered in their propensity to give. With the release of the annual Giving USA 2021 report published by Giving USA Foundation last week, our research colleagues within the Lilly Family School of Philanthropy found that total charitable giving increased 5.1% in 2020. What do these numbers mean for the variety of donors and nonprofits that experienced this past year quite differently? How does the story of charitable giving fit with the particular circumstances of congregations and religious nonprofits? And finally, what might these comprehensive 2020 findings tell us about the present and future of faith-based giving?

2020 Giving Headlines

In focusing on the donor side of the giving equation, a few trends emerge. With the economic shock of the effects of COVID-19 as well as the uncertainty around markets and reopening plans, giving by corporations saw the biggest decline (-6.1%) over the last year. Yet, giving to bequests and foundations grew significantly (10.3% and 17% respectively). Many foundations responded to the pandemic by going beyond their regular grantmaking to meet the immediate needs in communities to provide food, shelter, and healthcare. Others responded to increased public advocacy sparked in the wake of George Floyd’s murder with calls for change within philanthropy to invest in Black, Indigenous, and people of color (BIPOC)-led nonprofits and their communities. Additionally, the largest foundations are being encouraged to take the crises of 2020 as momentum to contribute even more than the minimum five percent payout requirement to address the pressing issues of equity, justice, and community change.

Giving by individuals grew by 2.2%. While a relatively modest growth, this past year highlighted the growing fortunes and philanthropic investments of several mega-donors in contrast to the regular broad-based giving of other Americans. As billionaire philanthropist MacKenzie Scott illustrated through the headlines garnered through her $6 billion in donations to nonprofits in 2020 (and another $2.7 billion already in 2021), the wealth gap is growing both in society and philanthropy even as some philanthropists are seeking ways to respond.

What do these trends mean for the nonprofits that rely on charitable giving? Several of the subsectors seeing the largest growth over the past year were those on the frontlines of the economic and health crises. Giving to human services grew 9.7% while donations to public-society benefit organizations increased by 15.7%. These organizations faced increased needs last year. They served as the frontline agencies responding to hunger, basic needs, and social services. Agencies like United Ways, Jewish federations, and community development corporations were also well positioned as established clearinghouses able to distribute funds quickly through local networks serving communities.

Subsectors that struggled – like the arts/culture/humanities (-7.5%) and health (-3%) – may have declined because of missed fundraising opportunities dependent on in-person events. Most museums and concert halls were closed – the galas, races, and raffles that often raise major support for specific diseases or causes also did not happen or were moved online. Beyond the organizations that were responding to the specific crises of the last year, organizations with deeply committed ongoing donors and ingrained fundraising practices that could be moved online seemed to do better.

Trends in Religious Giving

For those of us focused on religious giving trends in particular, the same patterns from previous years generally continue. Religious giving (narrowly defined as predominantly giving to congregations, denominations, missionary societies, and religious media) grew one percent this past year, but compared to the overall 5% growth across the charitable sector, religious giving continues to lose market share. While still the largest subsector at 28% of total giving, the overall percentage has continued to decline rather drastically over the past few decades.

Yet, considering the circumstances in such a unique year, if you predicted religious giving would remain basically flat, I imagine most religious leaders would be happy with those results. Alongside the shuttering of almost all in-person services for most of last year, congregations had to find new avenues for the majority of giving that occurred through these in-person services. While Payroll Protection Program (PPP) and federal government stimulus payments may have helped some people and organizations, faith-based organizations did have to adapt their methods of fundraising too. Lake Institute’s early COVID-19 Congregational Study found that 84% of congregations had the ability to accept contributions online before or right after the pandemic began.

Quick adaptation to new forms of asking for and receiving support became essential for most religious organizations, and many demonstrated remarkable resiliency in responding. At the same time, the challenges of the pandemic highlighted even greater differences between religious organizations. The contrast was not simply due to differences across size, age, or ease with technology, but also the openness of the organization to respond to change. When faced with disruption to traditional practices, some organizations met the challenge, developed new capacities, and established new habits and practices. Under a variety of stresses, other organizations did not have the capacity for creativity, resisted change, or simply hoped for the best. Often these contrasting approaches differentiated organizations that found success or faced diminished capacities over this past year.

On top of these disruptions from the pandemic, religious giving also faced ongoing challenges from declining trends in affiliation, attendance, and membership. Gallup reported that for the first time, in 2020 less than half of Americans reported membership in a congregation. If religious identity and activity are leading indicators of giving to both religion and secular causes, these trends remain concerning. Headlines focused on Christian nationalism and polarization may lead some to give out of their particular political passions, but overall, it leads many others to disassociate from engaging with traditional religious organizations. Fewer and fewer Americans identify their religious identity as significant in influencing their civic engagement. Over half of all Americans admit that neither religion nor spirituality influences their civic engagement, although spirituality remains a much more significant influence than religion. As the frameworks around giving, volunteering, and engaging our communities are changing, faith-based organizations must be ready to respond in new ways.

What Do these Changes Mean for Religious Organizations?

As we enter a new stage of the pandemic in the second half of 2021, Lake Institute recently surveyed our Insights readers to look ahead to the key challenges over the next year. Through our initial analysis of the responses received, it appears that, in contrast to last year, many organizations are embracing an openness to prioritizing future-oriented goals. If last year’s first response was simply pivoting and survival, this year, the emphasis has turned toward a capacity for strategic thinking and planning, grounded in mission and purpose, but strongly oriented toward serving needs in the community.

Yet, at the same time, those organizations with energy for strategic planning are also realistic. They are ready to focus on repurposing existing resources to produce a more streamlined and sustainable future. To be clear, this is not a resignation of religious organizations to shrink and become a smaller, weaker version of themselves, but rather seizing an opportunity to reimagine their mission in a new context.

If religious organizations may be destined for a less resource-rich environment, what is the future that we are funding? As donors and faith-based organizations contend with this challenge, the questions of money, meaning, and mission are central. Lake Institute is eager to walk along side organizations through this challenge as we face these most pressing questions in the days ahead.