Giving in America – key trends & how Australia should take note

7 takeouts from the Global Giving Summit

I was privileged to attend the Global Giving Summit 2023 at the Bill & Melinda Gates Foundation in Seattle as the only Australian participant. It was an inspiring gathering of 170 philanthropy leaders focussed on growing giving.

Here are my seven key takeouts on current 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 in the US donating a staggering $327 billion in 2021, according to the Giving USA Foundation | The Giving Institute report. However, the number of American households giving has declined – from two-thirds to less than half. Fewer people are giving, but those that do are giving more.

In America, the rich give, give big, and give publicly. Contrast this with the 2022 high net wealth giving report 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 ( Australian Charities and Not-for-profits Commission Charities Report), there is a danger that fewer people giving could lead to fewer and less diverse causes being supported and 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 DonorsChoose , 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 giving 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 over a decade.

US initiatives like Philanthropy Together and Philanos provide a robust infrastructure to encourage growth and participation in collective giving. Sara Lomelin , a keynote speaker at the Summit, spoke about how giving circles can drive change, strengthen society, and help diverse solutions get funded.

The collective giving movement is still in its infancy in Australia, with successful examples like Impact100WA , The Funding Network Australia and Groundswell Giving . 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 U.S. 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 $234.06 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 Australian Philanthropic Services Foundation, Australian Communities Foundation and Perpetual Limited Foundation leading the way. PuAFs have largely avoided controversy here, as we have a minimum payout rate of 4% annually. If America is anything to go by, I predict that 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. 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 here 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 The US and Australia are different, but we should aspire to their 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 the 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 Indiana University Lilly Family School of Philanthropy 2021 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.

And 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 was first published in Philanthropy Weekly on 5 May 2023.

The statistics on racial equity funding were updated on 9 May 2023, with thanks to Lori Villarosa for the clarification.