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The number of people making donations has declined , but amounts are increasing .

By Karen DeMasters

CONTINUING DECLINE OVER THE years in the number of people making charitable donations is being countered by an increase in the amounts given and the use of donoradvised funds , according to philanthropy leaders .

The trends in these funds , and the future of philanthropy in general , will be influenced by a number of tax law changes that could come about in the next year or two , say industry observers . The Covid-19 pandemic changed the way people have gone about leaving legacies and the way charities address their needs .

The share of Americans who give to charity declined from 50.9 % in 2018 to 46.9 % in 2020 following the onset of the pandemic , according to the Lilly Family School of Philanthropy at Indiana University , which released the figures in its October report , “ The Giving Environment : Giving During Times of Uncertainty .” The participation rate for 2020 was four percentage points lower than the share seen just two years earlier . The researchers said pandemic factors hastened the decline .

For charities , this has meant revamping some of their appeals . “ The uneven impact of the pandemic on U . S . households highlights a need for nonprofits to understand how lives have been shaped and will continue to be changed by these adversities ,” the report said .

“ This includes tailoring appeals that are more personalized , flexible , and based on a donor ’ s current situation and preferred method of giving , such as online giving . It can also mean expanding volunteer opportunities for those who are not in a financial situation to give monetarily .”

Despite a decline in the number of donors , total giving continues to increase . One of the things shaping giving and helping push totals higher is the great wealth transfer , says Dr . Una Osili , associate dean for research and international programs at the Lilly Family School of Philanthropy .

“ A lot more people are thinking about their legacies at the same time that a new generation of younger donors is emerging ,” she says . “ The economy will be the real driver of philanthropy ” in the future , as it always has been during both good and bad times .

Donor-advised funds have been growing in popularity for decades , and most of the major financial institutions now have their own . Their continued growth , however , depends in part on the fate of the 2017 Tax Cuts and Jobs Act and its cap on the deduction for state and local taxes ( also known as SALT deductions ). The cap expires at the end of 2025 .

If it becomes more advantageous for taxpayers to itemize income tax deductions every year , donor-advised funds might lose some of their appeal , says Isaac Bradley , director of financial planning at Atlanta-based Homrich Berg Wealth Manage-

32 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2024 WWW . FA-MAG . COM