The cost of inflation these days is palpable. No one is immune when purchasing power on everyday essentials goes down. But beyond gas and groceries, there's an insidious effect of inflation that has real consequences for philanthropy in America.
It's no secret that the United States is stuck in an economic malaise — and is rapidly barreling toward a recession. Despite the Biden administration's constant blame shifting and deflection, the American people are keyed into the truth. Wild government spending must stop and policies need to be tightened if the United States stands a chance of bringing inflation down. However, with Democrats in power, who are more likely to set money on fire than actually help the economy, it's clear Americans are in for a rough ride for the foreseeable future.
President Biden's historic inflation is impacting American families in numerous ways. Whether it's being forced to pay upwards of $4 a gallon for gas or the rising costs at the grocery store, it's clear that Americans are hurting. However, Bidenflation doesn't just stop at the gas pump or the supermarket, it also impacts America's most vulnerable communities — by affecting the amount of money going to charitable organizations and nonprofits.
Inflation is defined as a general increase in the prices of goods and services in the economy over time that corresponds with a decrease in the value of money and a sustained upward movement of prices while purchasing power is decreasing.
During times of high inflation or recession Americans simply have less to give, it's no secret and it's not rocket science. When boarding a flight passengers are always instructed in case of emergency to put their own life vest on before assisting others. The same can apply to charitable giving during times of financial crisis. When the purse strings have to be tightened — the most vulnerable in our society ultimately suffer the most.
Charitable giving within the United States is a massive source of funding for charities and non-profits, in 2021 more than $484 billion in contributions were allocated towards philanthropic organizations and causes. In 2020, during the height of a global pandemic and in the midst of an economic crisis, the U.S. reported more than $460 billion in charitable giving.
According to Giving USA, the longest-running and most comprehensive report on the sources and uses of charitable giving in America, while charitable giving grew since the pandemic, it did not keep up with the cost of inflation, a troubling sign for those in need.
“The story of charitable giving in 2021 is closely tied to the events of 2020, a historic year that included a global pandemic, economic crisis and recovery, efforts to advance racial justice and an unprecedented philanthropic response. In 2021, Americans continued giving more generously than before the pandemic. However, the growth in giving did not keep pace with inflation, causing challenges for many nonprofits,” said Laura MacDonald, CFRE, Chair of Giving USA Foundation and Principal and Founder of Benefactor Group. “In 2021, many donors returned to their favored causes, with many of the sectors that struggled in 2020 making a recovery in 2021.”
Inflation rates haven't hit similar levels since the 1980s, leaving many in the fundraising space with their hands tied as to exactly how they can overcome this mounting issue.
During the 2008 Great Recession, charitable giving dipped by 7.2% and another 8% in 2009 according to The San Diego Foundation.
As bad as that was, the global inflation crisis we're currently facing is exerting a level of pressure that hasn't been seen in most of our lifetimes.
Door County Habitat for Humanity Foundation President and CEO Bret Bicoy notes:
“We've never had in the past years anything like this in terms of inflationary pressures. So for most professional people they have no experience like this. It's a new experience for all of us under the age of 60.”
Richard Viguerie, who is widely considered a pioneer of modern American politics for his development of direct mail fundraising, has been entrenched in the world of fundraising since the 60s. He predicts the economic woes impacting the charitable sector are here to stay and the outcome could prove disastrous.
“This is not a speed bump — it is not going away in one, two, three years — these economic issues will continue to impact fundraising for charitable clients for the foreseeable future,” Mr. Viguerie said.
However, Mr. Vigurie stresses that it's not only inflation having a detrimental effect on charitable giving. He names a culmination of “6 storms” — inflation, sky-high gas prices, a recession, supply chain issues and impending stagflation, coupled with a lack of professionalism among conservative organizations — that are having a crippling impact on the industry.
“The vast majority of conservative organizations don't have more than one person, at most, in development which is a massive problem, and they're leaving money on the table,” Mr. Viguerie said. “The professionalism is mostly lacking.”
The effects within the charitable sector can be seen as organizations are forced to address the increasing costs to purchase and provide goods and services, driving up demand for services and forcing nonprofits to limit their services due to financial constraints.
“On average our mailings are costing everyone in the nonprofit [sector] about 25% more than three years ago and donations are off about 25% which is a huge problem that isn't going away. It's permanent.” Mr. Viguerie said.
The U.S. Postal Service has been forced to announce steady price increases for mailing, a move that Mr. Viguerie mentioned is here to stay, meaning organizations simply have to adapt to the changes and the long-term impact those additional costs will have on their bottom line.
In July, USPS upped its First-Class Mail prices by 6.5% but noted this is unlikely to be the only price increase consumers will see in the coming years.
“We average sending over 100 million postal letters a year. Now we're ordering mailing envelopes two or three months in advance. Companies are going out of business and others are now making boxes for Amazon and Costco,” Mr. Viguerie reflected.
Tim Kachuriak, founder and Chief Innovation Officer of the charitable fundraising agency NextAfter noted in exasperation, “Over the past 12 months, we have seen that the costs to acquire a donor have increased 95%.”
Increased costs for food items are putting pressure on the budgets of direct service organizations that are stocking their shelves to meet the increasing dietary needs of poor and vulnerable families. Even if most food items are donated, organizations such as food pantries still need to purchase some items.
Other organizations that provide people with homes, such as Tunnel to Towers which donates smart homes to U.S. service members, have been hit hard by rising building costs. The costs for materials like wooden pallets have jumped from approximately $12 prior to the pandemic to more than $21 apiece, significantly eating away at a budget for a new home.
Kathy Cunningham, a board member with Tunnel to Towers, remarked that while the organization has managed to successfully weather COVID-19 and rising inflation the soaring costs associated with producing homes for veterans are unavoidable.
“To build a smart home is roughly $500,000 dollars and it's nice to have huge sponsors but the cost of materials has gone up, sheetrock and wood, those costs have gone up,” she said. “Not only has the cost gone up but finding workers is a whole different ball game. You have to have the works and the materials, so on that end, I can definitely say all of our costs went up, even with big sponsors.”
Habitat for Humanity Philadelphia noted a drastic cost increase from $5,000 to $8,500 to replace a roof on a row house in a single year. The issue is not helped by the fact that the shipping and transportation of materials have skyrocketed due to higher gas costs.
This 40-year record high in inflation is inescapable and unsustainable. It has forced nonprofits that managed to survive a crippling pandemic, and were hoping to recover their financial stability, to navigate another gauntlet. If inflation continues as experts predict, it's entirely likely some charities will be forced to shutter or their effectiveness will take a direct hit.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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The posotives is to ID fake NGOs & charities alone
I have given up hope that politicians, and by that I mean ALL Democrats and even many RINO Republicans, will ever grow up and realize that we CANNOT spend more money than we have in the present. Because some day the Devil will come for his due and we all will suffer abominably. But the legislators are all coasting on the gravy train and far too few care about their constituents.