Nonprofits are facing significant, arguably unprecedented, challenges and it’s crucial that donors, whatever their ideologies or particular programmatic goals or priorities, pay attention and address these threats to the nonprofit sector. Three developments, in particular, worry me: a drop in rates of giving to nonprofits; widespread staff burnout; and an increasing effort to target nonprofits based on their missions and values.

Donors Down, Dollars Down?

Let’s start with the threat to the nonprofit sector due to the drop in rates of giving to nonprofits. A recent report from the Lilly Family School of Philanthropy at the University of Indiana notes that the proportion of U.S. households giving to charitable organizations has fallen from two thirds in 2000 to just 47 percent in 2020, the most recent year from which data on giving participation levels is available. The decline has been driven especially, most recently, by a drop-off in secular giving.

Significantly — and contrary to what some arguing for a broader definition of giving that goes beyond donations to nonprofits have asserted — generosity has not been redirected to direct, person-to-person giving, presenting a threat to the nonprofit sector. “It is important to note that private transfer giving rates have not witnessed any significant increases between 2008 and 2020,” the report states.

Notwithstanding what sometimes feels like increased attention on philanthropy, the stark reality is fewer and fewer Americans are giving. For years, this drop in giving rates was overlooked because overall giving — in terms of total dollars donated — increased; what the authors of the Lily School report described as “donors down, dollars up.”

However, it may be now becoming “donors down, dollars down.” In 2022 and 2023, total giving declined in inflation-adjusted dollars. A national commission recently released a report on what might be done, including, importantly, making the tax deduction for charitable giving available to all tax-payers. But there is scant evidence of success, yet, in turning this troubling trend around.

Burnout Among Nonprofit Staff Presents a Threat to the Nonprofit Sector

The second development is widespread burnout among nonprofit staff — who make up 10 percent of the American workforce — fueled by many factors including a tougher fundraising environment. In a survey CEP conducted last year, nearly all nonprofit leaders expressed some level of concern about their staff burning out and more than a third reported that it is “very much” a concern. (We will be taking the pulse of nonprofit leaders on this topic again this year.)

Read the full article about threats to the nonprofit sector in the U.S. by Phil Buchanan at The Center for Effective Philanthropy.