Americans donated nearly $485 billion in 2021, 4 percent more than in 2020.
WalletHub released its report the Most Charitable States for 2023.
The personal finance website determined where the most generous Americans live by comparing the 50 states based on 19 key indicators of charitable behavior. Data includes volunteer rate, the share of donated income and the share of sheltered homeless.
The most charitable states are Utah, Maryland, Minnesota, North Dakota and Oregon. Virginia ranks no. 10.
The least charitable states, according to WalletHub’s report, are Arizona, New Mexico, Mississippi, Louisiana and Nevada.
Blue states are more charitable than red states with 24.08 percent versus Republicans’ 26.92 percent.
Experts responded to the biggest challenges facing U.S.-based charities in the current economic environment.
“The COVID pandemic has been posing a series of severe challenges for U.S. charities, including but not limited to increased demand for (health and human) services, revenue loss from multiple sources, staff and volunteer unavailability due to labor shortages, and unstable financial conditions,” Dr. Jiahuan Lu, an associate professor & MPA Program Director at Rutgers University, Newark, said in a press release. “The current economic environment is making things even worse. It is important to note that although every charity is being affected, some charities, especially small, grassroots ones, are hit harder than others.”
Dr. Robert K. Christensen is a professor and Research Fellow at Brigham Young University. He said evidence suggests donors and donations are resilient to inflation and he has seen positive, charitable responses to needs created by the pandemic.
“That said, donations are somewhat sensitive to the strength of the stock market. General economic confidence is an important factor that U.S.-based charities should consider in predicting donations. Another important consideration for U.S.-based charities is to realize that while donations have remained high, the average donor profile continues to shift away from the middle class. Fewer, larger gifts from more wealthy donors have become the norm. Charities that have typically relied on more, smaller gifts from less-wealthy donors will need to account for this trend, which seems to have some permanence,” Christensen said in the press release.
What advice do you have for choosing the right charity?
“The right charity is the charity that resonates with a donor’s values, stewards their money well, and demonstrates impact or the ability to impact the world through its mission,” Dr. Margaret Sloan, Director, Professor and Advisor of Nonprofit and Community Leadership Concentration at James Madison University, said in the press release. “Of course, you want to be a wise steward of your funds, so check the organization’s financial outlook through annual or financial reports that transparent organizations will have access to on their websites or you can find financial documents for many charities on Candid, formerly GuideStar. I encourage folks to look across three to five years for a stronger understanding of your charity’s financial health than just a one-year snapshot. Also, some watchdog charities such as the Better Business Bureau’s Wise Giving Alliance or Charity Navigator rate organizations and can offer additional information about an organization’s adherence to best practices regarding board governance or financial reporting, but donors should also know these ratings do not tell much, if any, of the story about an organization’s impact.”
Department Chari and Associate Professor of the Sociology Department at Brigham Young University Curtis Child said to do your homework before making donations.
“All of us can suffer from optimism bias, especially when we see high-production value websites and brochures that sing the praises of a charity. But pay close attention to how charities use their money as well as the data they provide on their program outcomes. Websites like GuideStar or Charity Navigator can be helpful, but so can simply looking at a charity’s publicly available tax documents,” Child said.
Christensen said the percentage of income households should donate to charity is greater than zero. Documentation exists of the financial benefits for including donations in your budget.
“Beyond the financial benefits of reducing tax burdens, charitable giving promotes deeper feelings of personal satisfaction, higher morale and lower stress. Identifying the specific proportion of one’s budget that should be dedicated to charitable donation should, like other budget decisions, be systematically reviewed. As particular needs arise, e.g., the pandemic, or as a household’s financial capacity increases, having an up-to-date giving plan is key. Including other members of the household and, when helpful, a financial planner, is a smart approach. Much like planning and budgeting for a vacation, planning and budgeting for giving can be a very rewarding process in and of itself,” Christensen said.
Child said no magic number exists for begin charitable, and no answer applies to everyone.
“The question is both a financial and a moral one. It is a bit of a cliche, but I believe there is some wisdom in giving until it hurts just a little,” Child said.
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Rebecca Barnabi
