performingarts organizations religious charities and small nonprofits are suffering the most from a historic dip in philanthropic giving last year according to a group that analyzes the sector two years of data—from 2021 and 2022—released by the irs in june revealed “a decline in the number of american households that give with an even sharper slope in decline for religious giving” says michael thatcher president and ceo of new jerseybased charity navigator which rates nonprofits based on factors like effectiveness and financial health “at the height of covid and the racial reckoning we entered people gave very generously to organizations focused on health and human services” thatcher says “an organization that dealt with human interaction like theater or dance really suffered because human interaction was curtailed if it wasn’t a key focus of what was happening in 202021 it didn’t do well” now the climate crisis has become a focus “it’s in our face and we’re living it so there’s a total shift back to climate in philanthropy” he says because of an irs backlog in publishing form 990 data—which cover taxexempt organizations—donors had been unable to access uptodate information on nonprofits for more than three years thatcher says making informed decisions about giving became a challenge “the irs had fallen significantly behind and most of our ratings were out of date as a result” he says “this year they finally caught up with millions of updated 990s public websites like ours work with public data so donors can now feel confident they’re looking at the most current information not historical data” a june report from nonprofit thinktank giving usa revealed that us charitable giving totaled us49933 billion in 2022—a 34 decline from 2021 and only the fourth time in four decades that charitable giving took a dive the 2022 results followed the best two years on record for giving when total donations surpassed us500 billion for the first time giving usa said the dip in giving resulted partly from “the economic shakeup that started last year inflation and mortgage rates are rising that affected smaller donors and that’s where the money is diminishing” thatcher says at the same time “there are trust issues there’s a lack of understanding of how the nonprofit sector works as well as confusion and doubt about the sector” a 2017 change in the us tax code which nearly doubled the standard deduction—from us6500 to us12000 for individual filers and from us13000 to us24000 for married couples—meant “some people no longer got the tax benefits of giving” he says as a result the number of american households that give to charity has now sunk below 50 thatcher says “small donors are pulling back but millionaires are giving more it’s fewer people but more dollars” without the deep pockets of big national organizations smaller nonprofits have had a tougher time bouncing back thatcher says “a nonprofit’s size had an impact on its ability to recover” he says “those with less than us500000 in annual revenue are still struggling when you’re larger you generally have diversified revenue streams think of a small animal shelter in a small town they’re probably just getting support from the community rather than grants or other sources we’re in a different world now and i’m not sure how long it’ll take them to come back” for donors who want to maximize the impact of their gifts “follow your heart with where you want to give but use your head to find an organization that’s making a difference” thatcher says he suggests four questions does the organization have strong finances is there a strong leader is the organizational culture equitable and what impact has the nonprofit had on the world major gifts require even more due diligence he said “if you’re about to donate us500000 talk to an organization’s leadership to make sure they have sound finances treat people well and can articulate progress against the problem they’re trying to solve if you can’t get that find another organization” public sites like charity navigator and the better business bureau’s giveorg provide free tools to assess metrics he says donors should also consider whether a large or small charity will make the most of money donated “since small charities are having the hardest time picking themselves up again your dollar might go further but with a bigger organization you can also have a more immediate impact against an issue you’re trying to solve” thatcher says as charity scams proliferate thatcher also recommends vetting an organization before making a significant gift “fraud happens even more in times of crisis” he said “first ask the organization for an ein employer identification number which is essentially their social security number if they can’t articulate it or you can’t find it in a search they’re fake there are also a lot of lookalikes and names that sound like other names using a free platform is a fabulous way to weed them out because you won’t find the fake name” the nonprofit sector matters more than ever thatcher says “it’s the safety net for society” he says “it fills in the gaps where government can’t provide service and businesses can’t make money the sector needs support and there are a lot of people that need the sector”