Seven US giving trends

by Antonia Ruffell

I was privileged to attend the Greater Giving Summit at the Bill & Melinda Gates Foundation in May 2023 as the only Australian participant. It was an inspiring gathering of 170 philanthropic leaders focused on growing giving. Here are my key takeaways on giving trends in the US and what they might mean for Australia.  

1. Charitable giving is at record levels – but fewer people are giving more

The scale of giving in America is impressive – with individuals donating a staggering $327 billion in 2021, according to the Giving USA report. However, the number of American households giving has declined – from two-thirds to less than half. Fewer people are giving, but those who do are giving more.  

In America, the rich give, give big, and give publicly. Contrast this with recent research from the Centre for Social Impact that shows that while the wealth of Australia’s richest citizens has doubled in the last five years, giving from that group has stagnated. The average high-net-worth individual here allocates less than 1% to charity.  

There’s plenty that Australian non-profits can learn from American fundraisers about how to secure megagifts. It would be pleasing to see a marked increase in giving by wealthier Australians – but it comes with a reminder not to do so at the cost of ignoring everyday givers. With 86% of all charitable donations and bequests in Australia going to large charities (ACNC Charities Report), there is a danger that fewer people giving could lead to fewer and less diverse causes being supported, along with less money going to smaller, grassroots organisations.

2. Tech platforms play a transformative role in fundraising

There is a proliferation of tech giving platforms in the US, with those represented at the summit raising a cumulative $31 billion. Platforms are critical in connecting people to causes and encouraging all forms of generosity: donating, volunteering time, or getting behind a social movement.  

One of the most exciting aspects of tech platforms is connecting donors with organisations that they wouldn’t otherwise come across. US examples include cause-specific platforms such as Donors Choose, which makes it easy for anyone to support schools that serve low-income communities, Solidaire, which mobilises funding for social and racial justice movements, and the bigger players like Charity Navigator and Benevity.  

It has long been my bugbear that fundraising heavily depends on personal relationships, putting grassroots organisations – particularly those led by people with lived experience or situated outside the big cities – at a significant disadvantage. Visionary social leaders doing amazing work don’t necessarily have wealthy networks to hit up for funding.  

I am hopeful that technology can help to address this disparity, making it less time-consuming for charities to fundraise and provide donors easy access to the information they need to make gifts – a win-win for all. 

3. Giving circles are growing in popularity

Giving circles bring a social dynamic to philanthropy, with people coming together to commit to collectively give to causes that the group votes to support. The most recent landscape study of giving circles in the US found 1,600+ active giving circles, a three-fold increase in a decade.  

US initiatives like the We Give SummitPhilanthropy Together and Philanos provide a robust infrastructure to encourage growth and participation in collective giving. Summit keynote speaker Sara Lomelin spoke about how giving circles can drive change, strengthen society, and help diverse solutions get funded. I recommend her TED talk.  

The collective giving movement is still in its infancy in Australia, with successful examples like Impact100The Funding Network and GroundSwell. They are a terrific way to help people take their first step in giving, attract new types of donors and spark greater giving by all.   

4. National campaigns can make a difference

GivingTuesday, a generosity movement that inspires hundreds of millions of people to give, is having outstanding success. In 2022, GivingTuesday raised a record $3.1 billion in 24 hours for charitable causes in the US. GivingTuesday now has national movements in more than 85 countries.  

A national giving campaign is one of the initiatives being considered by the Australian government and Philanthropy Australia and is addressed in the current Productivity Commission Philanthropy Inquiry. Perhaps now is the time for Australia to consider launching its own version of GivingTuesday to encourage and mobilise large-scale acts of community generosity. 

5. Donor-advised funds are controversial

Donor-advised funds (DAFs) are the fastest-growing charitable structure in the US, enabling donors to establish their own tax-effective charitable fund within a bigger, managed structure. DAF Research Collaborative reports show an estimated $234 billion in charitable DAF assets in 2021, with a payout rate of 27%, the highest rate on record. They are popular and controversial. 

DAFs in the US have no minimum distribution requirement (whereas private foundations must distribute 5%). On one side, there is a push from many to enforce a minimum distribution, with proponents arguing that 20% of DAFs don’t distribute. On the other side, DAF providers say that with an overall grant payment rate of 27%, introducing a lower rate would detrimentally anchor people to lower giving rates.  

The equivalent structure in Australia is a public ancillary fund (PuAF) – with the APS FoundationAustralian Communities Foundation and Perpetual Foundation leading the way. PuAFs have largely avoided controversy here, as we have a minimum payout rate of 4% annually. If the US is anything to go by, I predict we will see an explosion in the popularity of PuAFs in Australia in the coming years.  

6. Dollars are not flowing equitably

Inequity in giving was a recurrent theme at the summit, with several sessions on racial justice and equity. However, similar challenges apply to other underserved communities. Discussions focused on how to put equity at the centre of funding models, engage with new types of donors and get funding to chronically underfunded communities.  

There are some sobering statistics. Lori Villarosa from The Philanthropic Initiative for Racial Equity noted that more than a third of the top 20 racial equity recipients were founded by white billionaires or large corporations advancing their own theories of change, often with minimal input from communities of colour. Another report from The Bridgespan Group and Echoing Green shows that revenues of promising Black-led organisations are 24% smaller than the revenues of their white-led counterparts, with unrestricted net assets 76% smaller. Organisations like Giving Gap are working to right the balance – but there is a long way to go.

Pushing beyond crisis funding is another challenge familiar to us in Australia. Many foundations mobilised funding during the Black Lives Matter protests of 2020, but time will tell how much this sticks and converts into much-needed untied, recurrent funding.

7. We are different to the US, but should aspire to its positive giving culture

I’ll continue to contemplate this, but my initial observations on the differences in our philanthropic cultures are that three key factors are at play.  

Firstly, the US social system is different. The lack of a social safety net and growing chasm between rich and poor is palpable, especially in cities like Seattle. The desperate need is visible on the street and is impossible to ignore.  

Australia has a much stronger social welfare system, with accessible education and health care – which can lead to a sense that ‘it’s the government’s job to fix it’. Of course, we do not want a breakdown in our social infrastructure to drive giving. Instead, how can we encourage the community to consider philanthropy’s role in complementing government, innovating and filling the gaps? 

Secondly, some differences exist between what the US and Australia count as charitable giving. The US includes religious giving and giving to public schools within its charitable giving figures. The highest aggregate dollar amounts are donated to organisations focused on religion (32%), basic needs (20%) and education (16%, combining K-12 and higher education), according to the 2021 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households. Meanwhile, in Australia, giving directly to churches or public schools to support their basic needs is not tax deductible and, therefore, not counted in our charitable giving statistics. 

Thirdly, and perhaps the most intriguing, is the difference in culture around giving. In America, people are proud of their generosity. GivingTuesday research shows that three-quarters of Americans enjoy giving, feel a responsibility to help others and trust non-profits. Giving in all forms is both celebrated and expected.  

In Australia, there remains a sense that philanthropy is done privately and quietly. At StartGiving, we are trying to normalise giving in the tech community, with many others across the Australian philanthropic sector also working hard to raise the profile of giving.  

I am optimistic that progress is happening and that we will soon see a day when giving by every Australian becomes the expected norm – and a personal joy.  

This article first appeared on the Philanthropy Australia website.