As Fiscal Year 2023 comes to a close today, fundraisers working to rebound from historic declines in charitable donations in 2022 may be facing an even worse 2023.

There are a couple of bright lights, however, and trends to keep an eye on.

Against a backdrop of a 10.5% decline in giving across sectors in 2022, two areas entered the year riding a wave of impressive increases, according to a Giving USA report coming out on July 11: arts organizations and international aid efforts.

An article on the report in the Chronicle of Philanthropy notes that donations to arts organizations grew 13.4% from 2020 to 2022, bested only by international affairs groups who collected donations for the war in Ukraine and other international disasters–their increase was 14.1%.

How did the arts fare so well?

Even before the pandemic, cultural organizations such as museums, zoos, aquariums, gardens, historic sites, and science centers enjoyed a high level of trust among the public, according to the National Awareness, Attitudes and Usage Study (NAAU) and Impacts Experience, a firm leading cultural organizations in making data-informed decisions.

This trust may have translated directly into dollars thanks to the array of digital programming and services that cultural organizations provided during the height of COVID-19, and the ability of museums and sites to reopen quickly and safely while the pandemic was still ongoing. In these and other ways, arts organizations maintained visibility and remained connected to their followers during a crucial period.

As a new fiscal year begins, it's worth noting the trends in philanthropic sources:

• According to an analysis done by the Chronicle of Philanthropy, contributions of $1 million or more to non-profits totaled $5.2 billion during the first half of 2023, compared to $7.4 billion for the same period in 2022.

• Foundation giving was up significantly–coming in at 20% of contributions to charity in 2022, compared to just 13% in 2012. Some foundations, however, are reducing giving in 2023 due to the impact of stock market volatility.

• Donor-advised funds (DAFs) should not be ignored: Fidelity Charitable’s donors awarded a record-breaking $11.2 billion last year, $1 billion more than the previous year.

• Stock market uncertainties are giving corporations the jitters–corporations already provide the smallest share of all giving, just 6% last year, and are expected to give less this year.

• Individual giving, which typically provides the bulk of all donations, fell by 13.4% after inflation, and accounted for just 64% of all gifts, continuing a four-year decline. A handful of the wealthiest are contributing increasingly outsize amounts: 3% of 2022’s total charitable giving came from just six individuals and couples.

• The wealthiest donors are also most likely to be concerned with ‘impact’ and ‘relevance,’ directing their giving to specific projects and initiatives that they perceive as new and urgent, rather than to operations and day-to-day services.

• Inflation hurts: even when incoming donations remain consistent and meet targets, the impact of inflation means that charities are facing serious challenges in their ability to provide programs and services at previous levels.

Taking action:

• Heading into FY24, communication and relationship management are key to navigating the current environment and building for the future, experts agree. Maintain your regular email campaigns, and keep in touch with donors even if they reduce their giving or lapse. This will be more effective than trying to build back when the environment improves.

• Continue to build and cultivate a wider pool of people who give small or medium-size gifts so donations–don’t just focus on the “big-game” donors. The “dollars up, donors down” effect will not help in the long run.

• Embrace the trend among donors to shift their giving to pressing but temporary causes. Emphatically communicate the relevance and impact of the work you do in the context of current events, and look at opportunities to “brand” your initiatives and package campaigns within a tight time frame to add immediacy to your requests.

While uncertainties remain, Una Osili, who oversees “Giving USA” research at Indiana University’s Lilly Family School of Philanthropy, told the Chronicle that fundraisers can learn a lot from what has worked in previous periods of economic volatility.

“You don’t stop engaging with donors, you don’t stop working with them,” she advised. “What we found is that organizations that stopped building those relationships had a much harder time recovering.”