$100 trillion wealth transfer expected to impact charitable giving globally, whilst nonprofits shift operations closer to beneficiary communities
Citi today released a Global Perspectives Solutions (Citi GPS) report titled PHILANTHROPY AND THE GLOBAL ECONOMY v3.0: Perspectives on the Future of Giving, (link to report, free access). In 2022, conflict in Ukraine drove an outpouring of charitable giving as donors around the world hurried to show their support. But only in some places was giving to Ukraine enough to bolster charitable donations and hold off the economic headwinds impacting donors' ability to give. The report investigates the trends observed in 2022, noting the renewed importance of understanding how increased geopolitical instability may shape future giving.
Although philanthropic sentiment remained high as the donation and volunteering boom seen during the COVID-19 pandemic became a new normal, charitable receipts evolved differently across the world in 2022. Headline figures in the U.S. reversed the growth seen in recent years while across the Atlantic, U.K. charitable receipts overturned 2021s declines, returning to growth and outpacing inflation. The rapid growth of giving in Sweden was especially notable after years of stagnation.
"Philanthropy is a significant contributor to the global economy. Despite economic headwinds in many countries, donors continued to play their part in addressing global challenges in 2022," says Amy Thompson, Social Economist at Citi Global Insights. "But some of the biggest markets for philanthropy have seen volatility in recent years and non-profits' resilience is being tested," she adds.
Beyond describing trends in charitable dollars, the report also highlights a reshaping of the donor base. Philanthropic dollars in the U.S. increasingly come from institutions, including corporates and foundations, as nonprofits and for-profits move closer together in partnerships, in business models, and in shared purpose. Among individual donors, philanthropy is also skewing towards more affluent groups who can give at the highest levels. This doubtlessly has consequences for philanthropy.
"Philanthropy is evolving to meet the sophisticated needs of non-profit organizations and the dynamic communities they serve," says Brandee McHale, Head of Community Investing and Development at Citi and President of the Citi Foundation. "The future of philanthropy is therefore one that brings the full range of private and social sector models to bear, and that supports these changemakers' capacity to scale and maximize impact through a flexible, trust-based approach to funding."
The allocation of charitable dollars across causes might change and giving might skew towards larger nonprofits who are best able to seek more affluent donors and their larger cheques. One way to replenish the broad base of the donor pyramid would be to deploy frontier technologies like artificial intelligence to deepen relationships with potential donors. But nonprofits, especially smaller organizations, face challenges to leveraging these tools.
These shifts intersect with wider changes in the individual donor base which further stand to reshape philanthropy. "An estimated $100 trillion wealth transfer from the Silent and Baby Boomer generations is underway," notes Karen Kardos, Global Head of Philanthropic Advisory at Citi Private Bank. "Their successors who include many more women often have distinctive values and philanthropic priorities, including addressing social inequalities and climate change," she adds.
The report also highlights the geography of philanthropy is shifting, beyond the surge in international giving to Ukraine in 2022. Donors are showing an appetite to support locally-led organizations that are operated and governed in the regions that they work in, and nonprofits are responding by shifting their operations closer to their beneficiary communities.
Growth in giving outside Europe and North America echoes where trust in NGOs is now highest. The highest level of trust is found in China, Kenya, India, and Nigeria, which have not historically given a high share of their GDP to organized nonprofits though some of them have had high rates of direct community giving through religious practices, like the Islamic practice of Zakat.
The idea of philanthropy as a flow of funds from the Global North to organizations operating in lower income countries, while still being governed from the Global North, is being therefore disrupted.
About Citi Global Perspectives Solutions (Citi GPS)
As our premier thought-leadership product, Citi Global Perspectives Solutions (Citi GPS) is designed to help readers navigate the most demanding challenges and greatest opportunities of the 21st century. We access the best elements of our global conversation with senior Citi senior professionals, academics, and corporate leaders to anticipate themes and trends in today's fast-changing and interconnected world.
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Contacts:
Citi, GPS:
Francesco Meucci
francesco.meucci@citi.com
Citi, Private Bank:
Michele Mendelson
michele.mendelson@citi.com
