U.S. charitable giving declined by 2.1% to US$557 billion in 2023, but the flow of funds began to stabilize following several years of volatility.

The annual report from the Giving USA Foundation, produced in partnership with the Indiana University Lilly Family School of Philanthropy, detected a lower level of giving in inflation-adjusted terms. Giving in nominal dollars, without that adjustment, climbed by $10 billion in 2023.

Total giving has swung up and down more sharply than usual in recent years. It first spiked thanks to donors’ responses to the COVID-19 pandemic and the movement for racial justice.

The stock market’s performance has played a role too. Stocks declined sharply in 2022 after a strong three-year streak, which culminated in 2021.

Conditions were more stable in 2023: Stocks performed well. Unemployment rates remained low, and the economy grew despite fears of a recession. Though inflation remained higher than the historical norm, rates fell below the high levels reached in 2022.

In addition, Americans were not reacting to the unusual events that have shaped philanthropy in the past four years.

As two of the report’s lead researchers, we see more signs of charitable giving’s strength than weakness in this new data. For example, giving from all sources – individuals, foundations, estates and corporations – remained above 2019 levels.

Foundations are playing a bigger role

Grants from foundations receded to $104 billion in 2023 from $106 billion a year earlier. Still, for the second year in a row, nearly $1 out of every $5 going to charities came from a foundation. In contrast, about $1 out of every $20 donated to charities 40 years ago flowed from foundations.

Until the dip in 2023, giving by foundations had grown for 12 consecutive years. An important reason for this consistent growth is the way that foundations give: Most foundations give 5% of their total assets each year, the minimum amount required by law. The rest of their assets remain invested and tend to grow over time. And as foundations’ assets increase in value, the amount they give away increases too.

Giving by foundations will likely continue to grow in the years ahead because large donors, including wealthy philanthropists Bill Gates, Mike Bloomberg and Warren Buffett, have been giving more to their foundations.

In the four years ending in 2023, giving to foundations was higher than at any other time since Giving USA began tracking this data in 1978.

Giving by individuals, by far the largest source of charitable donations, tends to be more responsive to the economic conditions of a particular year than gifts from foundations. It has been more uneven in recent years as a result. Individual giving was fairly flat in 2023, declining by 2.4% to $374 billion from $384 billion a year earlier.

Starting to stabilize in 2023

Churches and other religious causes have historically received the largest share of donations, and that held true in 2023. But religious giving fell 1% to $146 billion in 2023 and has declined in four of the past six years.

Social service organizations, also known as “human services” nonprofits, meet basic needs such as hunger and homelessness. In the past, giving to these charities has gone up during economic downturns, followed by a few years of slower growth.

However, a different pattern has emerged over the past four years.

Giving to social service organizations spiked as expected in 2020, as many people sought to support low-income and otherwise vulnerable people by donating to food banks, domestic violence organizations and homeless shelters. That kind of giving then kept rising in 2021.

Giving in this area grew again in 2023 after a slight decline in 2022.

Social services giving has grown so much that it was the second-largest category for charitable giving behind religion for the second consecutive year in 2023. Until 2020, education-related giving, such as donations to colleges and universities, was usually the next largest category after religion.

The latest Giving USA report shows what American philanthropy looks like in a year that was relatively uneventful compared with the ones that came before it – 2023 was the first year since 2017 in which no unusual event or legislation caused major changes to charitable giving.

We will continue to assess these trends to better understand what happens next in American philanthropy.

Anna Pruitt receives grant funding from the Giving USA Foundation, which publishes Giving USA.

Jon Bergdoll receives grant funding from the Giving USA Foundation, which publishes Giving USA.