Inflation is forcing Americans to be less generous these days
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Robert Lang, a longtime cabinetmaker in Cincinnati, used to feel good about giving money to less-fortunate people. These days, however, he's being forced to be less generous.
"I'm no great humanitarian," says Lang. "But I feel really good if I can give a homeless guy 20 bucks. And we can't do that anymore."
The reason? Rising prices, which have forced Lang to dial back his giving as the 69-year-old tries to make ends meet with Social Security benefits and a part-time job with a furniture-making journal.
"You look at your budget, and there's these things you're spending money on," Lang says. "What can you cut back on?"
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Lang is not the only donor feeling a little less generous these days.
Many charities in the U.S. report feeling doubly squeezed by inflation. It's not only driving up their own expenses but also sapping contributions, as would-be donors look for ways to cut costs.
Charitable giving fell sharply in 2022, when inflation hit a four-decade high. It bounced back slightly last year but remains well below the record levels of 2021, according to a new report from the Giving USA Foundation.
"When people actually have less money, or they're more nervous about the money they have and the direction things are going, things like giving might fall second to buying gas and getting a loaf of bread," says foundation chair Josh Birkholz.
Billionaires are helping, but small donors are still key
Megadonors are still writing big checks. Just five families — Michael Bloomberg, MacKenzie Scott, Phil and Penny Knight, Michael Dell and Warren Buffett — accounted for 5 percent of all charitable giving last year, according to Giving USA.
Their contributions helped push up individual giving by 1.6 percent in 2023 to $374.4 billion.
Birkholz says wealthy donors often try to tackle big, global challenges, such as malaria or food insecurity.
Small donors are essential, though, in addressing immediate, local needs.
"The everyday donor is what recognizes someone in my neighborhood is hungry right now and they just need a sandwich," Birkholz says.
The Hoosier Hills Food Bank in Bloomington, Ind., gets some support from big donors and foundations, but it primarily relies on small contributions from the six-county area it serves.
"Definitely the envelopes coming back in the mail with $25, $50, $100 are really the meat and potatoes of our support," says CEO Julio Alonso.
He worries that some of those small donors may be feeling worn out as their own budgets are squeezed. Contributions to the food bank have dropped by 20 percent since the beginning of the COVID-19 pandemic, even though the food bank is feeding 15 percent more people now than it did then.
"The lines at our food pantries are pretty long," Alonso says. "But a lot of the generosity and support that we and other organizations were seeing during the pandemic has dropped off significantly."
Charities also have to deal with inflation
Meanwhile, the food bank's own costs have gone up. It has to buy more groceries now to supplement donated food. Its 10 vehicles need fuel. And the food bank's mortgage reset this year to a higher interest rate, adding $500 to its monthly payments.
Alonso makes a note of those expenses when he writes to would-be donors, knowing many of them are facing their own financial challenges.
"The need is still very high because of inflation," he tells them. "We hope you understand that seeing your own grocery bill. And that if you're able to, you'll support us in trying to support our neighbors who can't make ends meet."
Churches and other religious nonprofits are the largest recipient of charitable dollars, although their share has dropped to 24 percent, compared with about 75 percent decades ago.
Human service organizations like the food bank are the second-largest recipients, with 14 percent of donations, narrowly edging out higher education.
Birkholz says a spirit of giving is still strong in the U.S., despite the economic challenges.
"Inflation is a formidable foe," he says. "But generosity is so darned resilient."
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