Donations to charities across the state are running out as fears of an impending economic recession mount. The holiday season is here and donations are more important than at any other time of the year. However, inflation is rising.
Donations to Arizona nonprofits are running low as fears of an impending economic recession mount.
The holiday season is here and donations are more important than at any other time of the year. However, inflation is rising. Data from the Fundraising Effectiveness Project shows that donations from individuals to nonprofits decreased by 7% in the first half of 2022 compared to donations in the same period last year.
“What we’re seeing is a slowdown in giving,” said Jennifer Purcell, senior vice president and director of development for the Alliance of Arizona Nonprofits. “And the slowdown in giving that we’re seeing the most is among our employees, who tend to give less than $100 annually.”
Donations increased in 2020 compared to 2019, a trend likely fueled by the Covid pandemic. However, things look a little different now. The number of people donating to charity fell for the fifth straight quarter.
According to Purcell, one thing nonprofits can do to help weather a recession is to have a financial reserve. However, in their opinion, this solution is only possible for larger organizations. This type of saving may not be practical for newer, smaller organizations.
The number of one-time donors and donations under 500 US dollars is falling. The number of people giving $100 or less decreased by 17%, and the number of donors giving between $101 and $500 decreased by 8 between the first half of 2021 and the first half of this year % return.
Jennifer Purcell
“People who live off fixed incomes, like some of our older people, may not have as much disposable income when they see increases in their normal expenses, such as paying for a living. For example, significant increases in food, services and things they pay for are able to donate to charities, and they can actually become recipients of those services as opposed to donors,” Purcell said.
Woodrow Rosenbaum, Giving Tuesday’s chief data officer, warned that the nonprofit sector is not ready for a recession. Small donations from the wider community are vital during times of economic slowdown. This is because wealthy donors tend to scale back their giving during recessions.
Giving Tuesday was last held on November 29th and provided an opportunity to rally the community and support charitable organizations. It is operated by Arizona Gives, a statewide program of the Alliance of Arizona Nonprofits. Rosenbaum said there are Giving Tuesday movements in 85 countries this year.
One problem Rosenbaum noted was the need for a strong base of smaller donors. This is because wealthier donors are more responsive to economic downturns, but donate less during times of financial weakness.
“The good news is that while people seem concerned about the economy, they seem pretty positive about their philanthropic intentions,” Rosenbaum said. “The polls we’ve seen from others show that people are concerned about the economy but expect to either maintain or increase their giving.”
In recent years, the federal government has created ways to help nonprofits stay afloat during the peak of the pandemic. According to the Alliance of Arizona Nonprofits, changes in tax laws that gave nonprofits relief in 2021 could affect federal tax returns for that year.
The CARES Act, passed in 2021, expanded and extended several federal tax donation benefits to those who donated to 501(c)(3) public charities in the prior year. Deductions for single taxpayers increased $150 from previous years, rising to $12,550 and $25,100 for married couples filing together. For heads of household, the deduction is $18,800, up $150.
The Alliance of Arizona Nonprofits is a statewide resource dedicated to advocating for the state’s nonprofit and philanthropic sectors. In August, the organization merged with the Arizona Grantmakers Forum. This merger should help maximize the resources available to the sector. The alliance consists of more than 1,100 members, including non-profit organizations. It was founded in 2004 to empower and support non-profit and philanthropic organizations.
The Alliance recommends that those who have donated to nonprofits retain receipts and records. Those who donated more than $250 to a single organization in 2021 will need a letter of appreciation from the nonprofit. Those who have donated food, clothing, or other non-monetary items cannot deduct that donation without making an individual deduction against their federal taxes.
According to the Arizona Department of Revenue, there are two separate state tax credits in Arizona for those who donate to nonprofits. This includes donations to eligible nonprofit organizations up to a maximum of $400 for individual applicants and $800 for joint applicants. It also includes donations to qualifying nursing charities with a maximum of $500 for individual applicants and $1,000 for joint applicants.
“I want to emphasize the importance of giving back to our community and being philanthropic, and that every dollar makes a difference,” said Purcell. “So whether you can give $5 or $500 or $5,000, it impacts the nonprofit sector that does the work in the community. If you have a charitable organization that you really care about, just donate to it once a year. Or once a quarter, once a month, whatever that is and put it in your budget.”
Tags: Qualifying Foster Care Charities, Giving Tuesday, Arizona Department of Revenue, Fundraising Effectiveness Project, Donors, The CARES Act, Nonprofits, Arizona Gives, Recession, Covid Pandemic, Alliance of Arizona Nonprofits
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