Research | January 28, 2021

2020: What a challenging year taught us about generosity

2020: What a challenging year taught us about generosity

We reviewed data and trends to help us to uncover what 2020 can teach us about donors’ giving and resiliency. Despite its challenges, there are many positive takeaways to draw from the last year. 

When the pandemic led to restricted access to many workplaces, businesses, and services, some were forced to shutter. There was uncertainty throughout 2020 about the state of the economy and discussions continue to abound on when a recovery could take place—and what that might look like.

The Canadian charitable and nonprofit sector, representing a very significant portion of the economy (accounting for 8.5% of the national GDP), experienced a double whammy of the effects of 2020. While fundraising and volunteer initiatives were hampered, needs were on the rise. 

Individuals across the country faced unstable employment and income, food and housing insecurity, and mental health needs. This in addition to the public health ramp up and the urgent demand for personal protective equipment to curb the spread of COVID-19. 

The bad news first

There was anxiety that donors would opt to give much less in 2020, especially in a year when they certainly would have reason to cut back and save towards their financial security. 

Several surveys found that donors were indeed planning to reduce their charitable spending. On top of this emerging trend, within the past decade, Canada has seen a decline in the number of active charitable donors. Until 2020, declining participation has been offset by a smaller number of donors (mostly older and wealthier Canadians) giving more money. The trend of declining participation in giving to charities is a very serious—and unaddressed—problem that could also accelerate due to COVID. 

According to a December survey from Imagine Canada, a research organization focused on the charitable sector, 7 in 10 Canadians said they planned to give less over the 2020 holidays. 

Unsurprisingly, in 2020, charities reported a decrease in donations and revenue. According to a May 2020 report from Imagine Canada, revenue for the sector declined by 30.6% after the onset of the pandemic, with 69% of charities reporting decreased revenues. Nearly three quarters (73%) of charities reported reduced donations. 

An Angus Reid Institute poll, in partnership with Charitable Impact and other organizations, found many Canadians felt the need to cut back on their giving in 2020. Notably, the most consistent and regular donors still planned to give the same amount as previous years. 

These “super donors”—who tend to give more and give of their own accord—did not change their giving habit due to the effects of the pandemic or may have even increased their giving. We weren’t surprised to learn this, similar to how it’s unsurprising to see our friends most dedicated to fitness go for runs even during rainy Vancouver winters.

Still, it should be noted that the reports of declining charitable revenue speak to a major lack of resources affecting the sector. Charities who were able to pivot to online models of service likely weathered 2020 better, compared with those limited in the scope of their services. 

There is an enormous need facing charities as we enter into 2021, and many advocates are continuing to call for further supports from the government. Across the country, 2020 was an enormously challenging year for many charities. 

The good news 

Despite the complicated challenges of 2020, there were also notable movements of generosity and charitable action. Food banks saw record levels of donations. Individuals set up community groups to help meet each others’ basic needs. Community fridges popped up in neighbourhoods, organized and stocked by local residents. People in quarantine found creative ways to help those in need

We have seen Canadians’ inspiring generosity on our platform. As more people became aware of the benefits of centralizing their giving through an Impact Account, we noticed early trends towards increased giving on our platform—something we are grateful and proud to say continued throughout the year. 

Donors stepped up to give on Charitable Impact

On Charitable Impact, there were early boosts in donations to charities responding most directly to the COVID-19 pandemic (in health and community outreach). The peak was an increase of 789% in April in giving to those causes on our platform, compared with April of 2019. 

In another example of outstanding levels of giving, allocations to the Greater Vancouver Food Bank (whose mission is to provide nutritious food to those in need) reached new levels in 2020. Donors gave 6.6 times more than in 2019 to the food bank in our city. 

Overall across charities and causes, giving on the Charitable Impact platform increased in 2020—peaking with the last few months of the year. 

Donors continued to actively invest in their giving journey using our platform. Charitable Impact operates as a donor-advised fund (DAF), a giving vehicle that is analogous to a bank account exclusively for charitable giving. Another way to describe it is as a private foundation, but for all donors, regardless of how much they have to donate. 

Through an Impact Account, donors can deposit money into their account in exchange for an immediate tax receipt. Then, they can send funds to any of the more than 86K registered charities when they feel most inspired or as their giving plan dictates. 

Donors who give regularly benefit from the centralized tracking of their giving decisions, access to a single tax receipt report, and the increased ability to manage when and how they give to their favourite charities. For example, donors have the option to give anonymously through their Impact Account. 

Donors who intend to be more engaged with charitable giving—but don’t yet know which charities they want to support—benefit from being able to start saving up the donations they make into their account. They can do this while taking the time and space they need to find the causes and charities best matching the change they seek to create in the world. 

Money added to Impact Accounts (in the under $1 million segment) increased by 114% compared to 2019. An even bigger jump among these donors was seen in money allocated to charities through Charitable Impact, which was up by 179% from 2019 in the same segment. 

“The data in our platform tells us that our donors really chose to step up to help others in 2020. We saw increased giving across most causal areas and the average amounts given were higher than previous years. This speaks to our donors’ willingness to take their giving up a notch to help their neighbours and those in need during this very challenging year,” said Lise Owens, Research Strategist at Charitable Impact. 

During the last few months of the year when donors typically give more (often called the giving season), there was a 191% increase in giving (under $1 million) compared with the same period last year. We also saw donors returning from 2019 to give even more in 2020, as they rallied to help in a difficult year. 

Donors returned from 2019 and gave more in 2020

Charitable Impact has been growing steadily and attracting new donors as awareness grows of the benefits of giving with an Impact Account. Among a representative sample of return donors on our platform, 74% increased or kept the number of deposits to their Impact Accounts from 2019. In terms of amount of donations, in 2020, 70% increased or kept the amount of money given in 2019.

Most donors who returned to give in 2020 from 2019 actually increased their donations made through Charitable Impact: 70% increased the number of allocations to charities and  65% increased the dollar amount of the gifts they sent to charities from their Impact Account.

Among donors on Charitable Impact: 

  • There was a 179% increase in the total amount of money given to charities compared to 2019

 

Among donors who returned to give through Charitable Impact in 2020 from 2019:

  • 74% increased or kept the number of deposits to their Impact Accounts
  • 70% increased the number of gifts they made to charities from their Impact Accounts  
  • 65% increased the dollar amount of the gifts they sent to charities from their Impact Account

Donor-advised funds support giving during a crisis

As mentioned above, Charitable Impact operates as a donor-advised fund (DAF), which is like a bank account but only for charitable giving. It helps donors manage their giving more easily, regardless of what charities they want to support or how much money they give away. 

“When donors are empowered to separate the decision about how much money to donate each year from the decisions about which charities they want to support, their ability to shape their own giving journey increases dramatically”, says John Bromley, Founder and CEO of Charitable Impact. “We find that increased donor agency and autonomy, powered by useful donor-focused tools, increases the engagement donors feel with their giving. Donor engagement is both the biggest problem and opportunity facing the charitable sector today.”

This separation leads to the ability to give when and how you want. While most donors give using cash, it’s also possible to give other types of assets such as publicly traded securities, private company shares, life insurance, real estate, and crypto-currency. Charitable Impact has experience facilitating donations of all these assets and works with over 100 different financial advisors to help them advise their clients give in the most strategic and tax-effective manner.

Smaller charities benefit from our ability to accept larger and more complex donations, which they otherwise may not have the resources to process. 

Donors can also benefit since those making large donations rarely want to disperse funds immediately to one charity. More often, similar to how foundations operate, donors intend for a large charitable gift to fund their giving journey for some time. This allows them to reach and support many different charities over a longer period.

Our numbers also show that Charitable Impact donors are engaged with their giving. In 2020 our donors dispersed 25.9% of the money held in their DAFs, which is 7.4 times the amount mandated by the disbursement quota rules mandated by Canada Revenue Agency (CRA). These rules apply to all charities, including CHIMP: Charitable Impact Foundation.

Community development was a top 2020 priority among donors

Through our research work, we categorize charities under distinct causes in order to uncover trends and better understand how and where donors are giving. Based on this categorization, we were able to pinpoint the top 5 causes donors chose to support on Charitable Impact in 2020.

Top 5 causes supported in 2020: 

  1. Community development: Any organization that focuses on improving communities. This includes community groups, community-based infrastructure, civic and legal programs.

  2. Education and research: Any organization that focuses on education and/or research. Includes educational institutions, training programs and research organizations.

  3. Outreach and welfare: Any organization that provides social services to disadvantaged people.

  4. Environment: Any organization that creates impact related to the environment. This includes climate change, protection of specific geographic areas, community-based recycling programs and any other environmental programs.

  5. Health: Any organization that provides health-related services or funding. This includes health facilities such as hospitals or clinics and health-related research or advocacy organizations.

 

 

These trends show that donors were supporting a broad range of issues directly or indirectly exacerbated or affected by the COVID-19 pandemic. 

Anti-racism: Most-searched for topic 

We also looked at particular subjects or issues that donors were interested in potentially giving to, based on the entries within our own charity search engine. These topics reveal what is top-of-mind to donors, what is leading the charitable conversation for individuals, and what that can mean for how the charitable sector can address concerns and interests. 

The data can also reveal gaps between what donors are interested in supporting or learning more about and where the majority of charitable dollars are being allocated. 

Most-searched for topics on our platform in 2020 were categorized as:

  1. Anti-racism

  2. Mental health

  3. Scholarships

  4. Food banks

  5. Low-income

 

Donors drawn to Black Lives Matter movement 

“Black Lives Matter” and variations on the term were by far the most searched terms on our charity search page—replacing “love” which stood as the most searched term in February 2020. This shift followed the protests across North America in reaction to a police officer killing George Floyd on May 25th, 2020. 

“The Black Lives Matter movement has officially become mainstream and, consequently, broken through racial lines. The movement has evolved so much. Black Lives Matter has become an expression synonymous not only with anti-racism, equality, social justice but also peace, unity, and even compassion,” said Anick Silencieux, an Impact Ambassador with Charitable Impact and the founder and executive director of Support Black Charities. 

It’s notable that, juxtaposed over “Black Lives Matter” being the most organically searched topic by Canadians using Charitable Impact, there is 2020 research showing inequitable funding to related causes and charities across Canada.

A 2020 report (by the Network for the Advancement of Black Communities and Carleton University’s Philanthropy and Nonprofit Leadership program) found that charities serving the Black community or led by the Black community are not receiving funding from private and public foundations at the same level as other charities. The disproportionate funding is at a stark scale: For every $100 donated to a large charitable organization, only between $0.07 and $0.30 ends up helping Black charities

Silencieux says there is reason to see hope in the budding movement towards greater awareness of anti-racism initiatives and programs supporting the Black community.

“This new worldwide awareness has prompted the creation of several promising local and global initiatives. For many Black-led and Black-serving organizations and myself, it’s given us a renewed sense of purpose. It’s made it easier to bring up issues specific to our community, but also allowed us to openly share our experiences and address the lack of consideration within the charitable and philanthropic sector,” said Silencieux in an email interview. 

As donors adopt tools enabling strategic giving and the pooling of money with other like-minded donors, there is potential for greater impact on causes that may typically receive less funding. 

Prospects for 2021

We spoke with Arpy Dragffy, Principal and Head of Strategy at PH1 Research, to learn more about how these trends among donors and the charitable sector could play out in the coming months or years.

One risk due to the effects of the pandemic is that, while larger charities are still attracting funds, smaller charities may be left out.

Dragffy points to the neighbourhood associations and centres that can be the hearth for a community, but that have been forced to stop their services for the course of the pandemic. “We want our neighbourhoods to be thriving, diverse, happy, supportive—and it’s those micro-charities that are usually doing that,” said Arpy. 

This trend is not new but may have been exacerbated by the COVID-19 pandemic. According to a 2019 data analysis by Charitable Impact of giving across the charitable sector, about 1% of charities earn roughly 80% of the revenue. (This flow of revenue includes government funding, grants from other charities, and grants from individuals and corporations.)

Generally during the pandemic, Canadians have rallied to support very visible and relevant causes like food banks. But many smaller neighbourhood-based charities have been unable to adapt and risk being forgotten.

Recent research confirms that the pandemic has affected charities unevenly. A report from RBC found that, while some charities fared the pandemic fine, 27% didn’t receive any donations at all and 42% of charities received less in donations than they did in 2019. 

Data from 2020 based on giving only within the Charitable Impact platform shows nearly 22% of funds allocated to charities went to charities categorized as micro, mini, and small (meaning all with annual revenues of less than 200K). 

We believe that donors using Impact Accounts will continue to show higher levels of funding for smaller and more local charities. Search and social tools will increase the discoverability and promotion of small charities, which cannot afford to spend on fundraising at the same level as larger charities. 

Avoiding donor burnout by giving to causes you care about

Dragffy also cautions that it’s important that giving persists throughout 2021, as charities and other sectors continue to recover from a difficult year. “We’ll see what happens [in 2021] as conditions change, as child care changes, as we want to go back on vacation, will the dip happen?” he asked. 

He added there is also the risk of donors starting to feel the effects of burnout as the asks from charities increase: “The biggest challenge right now is that everybody is asking and as a consumer we have the ability to disregard what’s necessary and just make a judgment call in that moment.”

One positive note to keep in mind, says Dragffy: a trend in data showing younger adults, in their 30s and 40s, starting to commit to the charities and causes they feel most passionate about. As adults get older and are perhaps acquiring more wealth, they are starting to narrow down the number of charities they support. 

The fundraiser’s takeaway: If charities can cultivate donors who care deeply about their causes and missions, they can cultivate a strong donor base. Loyal and invested donors are more likely to offer sustained support, even through the rougher patches. 

On the flipside, for donors, cultivating a list of causes that resonate or align with their current interests offers a way to give more meaningfully. When donors give with intention to the things they care most about, they experience more joy which leads to more engagement and sustained giving throughout their lifetime. 

Through science, we know that giving is its own reward. When you give to charity, you tend to feel good. Even when others see people doing good, they feel secondhand joy and are inspired to help out as well. 

We also know that this joy of giving is optimized when you know the impact of your giving. If you give to causes you care about, you are more likely to invest time in knowing the outcome of your giving. 

Even further, if you are personally aligned with your giving you are more likely to stick with it. Giving can become a part of your identity and that helps to weather less inspiring times, when compassion and interest may wane for those not as invested in the cause. Our Impact Account allows you to take time to explore and discover the causes that resonate most with you. 

These factors can lead to better feelings around your charitable giving, more personal rewards, and more stamina for generosity. 

Giving your way with our support through your Impact Account

Charitable Impact provides donors with a space to invest in their own generosity. The platform is set a distance aside from the charitable asks and fundraising requests. Donors can add money to their Impact Account and give when they feel inspired or according to their own plan, rather when they feel obligated. 

By building the habit of adding money to give, donors like yourself can set the intention to be generous. You are separating the decision of adding money to your Impact Account from the allocation of money to charities. 

Then, you can allow yourself time to discover causes that call to you. Aligning your interests with the charities you support makes giving more personally significant. Plus, it can help support a thriving charitable sector

These themes echo a key takeaway from 2020, based on our own and others’ data: When your giving is a habit that is part of your life and budget, generosity can be maintained even during more challenging or turbulent times. This helps generate more consistent giving to charities across a range of causes. 

The Impact Account increases the ability of the donor to shape and, therefore, enjoy their giving journey. Charitable Impact is open and available to all donors, regardless of how much money you have, what charities you support, or how much experience you have with giving. 

Account balances at Charitable Impact range from the tens of millions to the tens of dollars. Some donors add small amounts to their account with an automated monthly deposit. Others make one large donation upfront, often using non-cash assets such as publicly traded securities or private company shares. 

By welcoming more donors into the practice of giving, generosity is boosted and that helps to maintain a strong charitable sector. 

Thank you to all donors

Again, we want to express our profound gratitude to donors. We are so humbled that donors have shown perseverance, kindness, and caring during a very difficult time. Thank you for any action you took to help others in 2020. We appreciate your generosity. 

Please keep the kindness going and consider how you can create your own giving habit. Think about what your brightest future could look like and how you can start building it. No matter who you give to or how much you give, our team is here to support the change that matters most to you.

 

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