Follow the Disposable Income…And Not Just From Charity-Related Organizations

Each year Giving USA produces some of the best data regarding philanthropy in the United States. I tell as many people as possible to make it a must read, or at least review, when it is disseminated in July/or August.  

This past report highlighted an interesting trend regarding the percentage of disposable income that households are giving to charity. Rather, how it's decreased to one of its lowest levels in decades.   

What might seem totally separate is the recent series of announcements including The Carlyle Group, who have seen and announced dramatic slowdowns in investment into private equity groups. In fact, Carlyle recently noted that its commitments were down nearly $4 billion in one quarter. Blackstone, Apollo Group, and KKR also announced decreases.

What does private equity have to do with philanthropy?

Most people utilize their own personal resources for philanthropy or investing through their disposable income. Once you've paid the rent/mortgage, gas, kids’ education, groceries, and other necessary household expenses, what's left might be construed as discretionary or can be spent on whatever you want. When we see a decrease in philanthropy and an investing, generally that means less disposable income. One of the deeply felt effects of inflation.

What I have noted in the last three or four months regarding the investments in private equity does not bode well for overall fundraising numbers for the second-half of 2022 and into 2023. In particular, the trend of fewer people making a larger difference in terms of overall gross philanthropy in the United States will, in my opinion, continue to grow. The largest donors may make it look like there's more philanthropy and from a pure dollar perspective that might be true.  BUT those closer to mid-level incomes are feeling the inflationary pressure and will give less to charities.

It's a new world. If you're not concentrating on the best opportunities, normally at the higher end, your fundraising totals most likely will suffer.