Boosted by a strong year for stocks and swift economic growth, U.S. giving in 2021 totaled a near-record US$485 billion.

Individuals, foundations, estates and corporations gave more to charity in 2021 than before the pandemic, according to the latest annual Giving USA report from the Giving USA Foundation, released in partnership with the Indiana University Lilly Family School of Philanthropy at IUPUI.

Giving was 0.7% below the inflation-adjusted all-time high of $488 billion in 2020 – when donors responded to the onset of the COVID-19 pandemic, the ensuing recession and an outpouring of concern over racial injustices.

As two of the lead researchers who produced this report, we found that inflation changed how far each charitable dollar went in 2021. We also saw that a significant percentage of giving came from extremely large gifts and that many charities whose 2020 donations declined may have experienced a rebound.

Did inflation affect giving?
Inflation – the rate at which purchasing power for food, rent and energy costs declines – was higher in 2021 than it has been in recent years.

When inflation heats up, charities need more money to keep up with rising costs. Household budgets can also get strained by rising costs of living. But charitable giving doesn’t automatically fall when inflation rates rise. In 1988 and 1989, for example, inflation exceeded 4% annually, but charitable giving grew in both years – even when adjusted for inflation.

However, higher inflation, particularly over time, can influence other economic trends that are more likely to influence how much money is donated. Those changes, in turn, can lead to declines in giving.

With inflation running at a much faster clip in 2022 than 2021, we’re keeping an eye on any effects it may have on giving until rates subside.

Read more: https://theconversation.com/americans-gave-a-near-record-485-billion-to-charity-in-2021-despite-surging-inflation-rates-185086