Fewer donors, rising costs, and changing habits define charitable giving in New York

ALBANY, N.Y. (NEXSRAR) — Despite a shrinking donor base and rising costs, charities still play an important role in supporting non-profits and advocacy across the state. The Pennies for Charity report, released by the New York State Attorney General’s Charities Bureau ahead of Giving Tuesday, reviewed the data and outlined some developments in philanthropy in 2023.

In 2023, nearly 1.4 million people in the state claimed over $40 billion in charitable deductions. The report—available at the bottom of this story—aims to help donors like them make informed decisions.

"New York has one of the strongest charity oversight bureaus in the country. Its annual Pennies For Charity report is extremely helpful because it exposes just how expensive this form of fundraising can often be," said Laurie Styron, the CEO and Executive Director of CharityWatch. "When people receive fundraising calls or letters, they may assume it is a charity employee or volunteer on the other end who is a true believer in the cause. In most cases, these are actually for-profit professional fundraising companies that are paid on commission or retainer to raise as much money from you as possible because they take a steep cut of whatever you give."

While total donations increased by 1.9% compared to 2022, charitable giving couldn't outrun inflation. The drop in individual giving represents an ongoing concern, especially for small businesses that rely on small, individual donations to make their annual budgets of under $500,000.

Still, professional fundraisers in New York collected almost $1.5 billion in 2023, with charities receiving about $1.2 billion of that. That's a slight improvement compared with 2022, with nine more campaigns and $5.8 million more in revenue.

But the fundraisers kept about $261 million, or 17%, of the money in 2023. In some campaigns, their take—meant to cover costs and fees—was more than half of the total raised. And in 46% of all campaigns in New York in 2023, charities received less than half of the money raised. In 16%, expenses exceeded revenue, costing those charities $26 million altogether.

Styron said that the report doesn’t show all of a charity's costs. Audits regularly reveal much higher expenses for fundraising and overhead than campaigns reflect. For example, a group with a $5 million budget might spend $4,000 on a fundraiser that raises only $2,000.

Though fewer people donated to charity in 2023, some gave more, with the amount of money from larger donations rising. As charitable platforms simplified the process for donors, online giving grew by 12%, according to the Blackbaud Institute. But fees for those online charity platforms can reach 8% for each donation.

And online donations often go through donor-advised funds (DAFs), delaying payments or changing where they end up. DAFs contributed to 62% of fundraising revenues, limiting how much money directly reaches charities. This apparent shift toward large, single donations and grants from DAFs raises concerns in the report about transparency and whether donations get used as intended.

Despite fewer volunteers, they still power charitable work to the tune of millions of hours every year, including 2023. Providing shelter and help after disasters, the American Red Cross relied on volunteers for 90% of its workforce, for example. And in 2023, Volunteer NY connected 35,000 volunteers to projects, working for almost half a million hours between them.

Although automatic monthly donations increased by 6%, charities struggle to sign up recurring donors. Plus, revenue generated through email campaigns fell, and text message campaigns have proven to be not very effective.

Crowdfunding, which generally draws in younger donors, also changed the landscape. Platforms like GoFundMe can blur the line between charity and individual support and divert support from established nonprofits, according to the Charities Bureau report.

Their report also advises New Yorkers who give to charity to review how much of their donation actually supports their cause. Professional fundraisers have to reveal such information, and the Pennies for Charity database lets you check how much of the proceeds make it to the charity.

According to the report, telemarketing solicitations have declined overall since 2021, falling from 401 campaigns using telemarketing in 2021 to 306 in 2023. That's good, according to Styron; she warned: "Telemarketing is one of the most expensive forms of fundraising, so donors should generally avoid donating this way."

Styron advised New Yorkers who receive a phone call asking for a donation to a particular cause to hang up and look up charities that support that cause to verify.

Take a look at the Pennies for Charity report below: