Reflecting on 2023: A Year of Challenges and Growth in Philanthropy
A message from Michael Thatcher, President & CEO, Charity Navigator
Photo - left to right: Marion Dugan, Pat Dugan, Founders, Charity Navigator; Michael Thatcher, President & CEO,
Friends,
One month into the new year, I’m reflecting on 2023, which brought terrific changes and challenges to Charity Navigator and the world. I am so thankful to the donors who use our tools and resources to find impactful charities doing the transformational work, while also providing us data to be rated, and the partners who help us do more to advance philanthropy–all of whom made our 21st year possible and worthwhile.
Responding to Global Crises
Throughout the year, our world faced a series of natural disasters and humanitarian crises. From devastating earthquakes in the Middle East, wildfires in Hawaii, the war in Sudan, and the humanitarian crisis in Israel and Gaza, the call for action was critical. In response to each of these situations, Charity Navigator served as the crucial link between donors eager to make a positive impact in these regions and the nonprofits directly involved in relief efforts. It is always rewarding when we can help get aid to those in need through higher-performing organizations acting in the regions affected.
The Giving Crisis in America
Charity Navigator has been closely monitoring a notable trend that has been a significant concern in recent years: the diminishing number of American households contributing to charitable causes. While the nonprofit sector plays a crucial role as a societal safety net, this safety net is currently under strain. The sector is experiencing heightened demand, yet it is simultaneously facing reduced support. We attribute this trend to a few factors.
The first factor is that trust is in decline in the U.S. 39% of Americans reported that they “trusted nonprofit organizations completely or very much”. That is higher than other institutions, including philanthropy, but it is a significant problem.
Another factor in the decline in the number of households giving is the higher standard deduction. That has made it less compelling for folks to itemize, removing the tax incentive to donate.
One of the interesting aspects of the decline in giving is that the dollar amounts are roughly the same. However, the donations are coming from fewer people. The economic downturn in 2022 caused some people to pull back because there was significant economic uncertainty.
This trust factor is where we see great potential for our work to make a difference. Charity Navigator is a trust broker and makes giving easy and seamless. We have a complete rating that tells a holistic story about the organization through a simple 0-4 Star rating coupled with a Giving Basket that allows for multiple charities to be supported at once. It is easy and it is effective. Not only do we look at the finances of an organization, but we also assess their impact, leadership, and culture. We believe that, with trust, there will be greater generosity. We see that as a great and growing need as we look ahead to 2024.
Website Traffic
The decline in household giving is not theoretical. A number of nonprofits have shared that they were down 20-30% in fundraising revenue year over year. And, for the first time in 10 years, Charity Navigator experienced a drop in traffic in 2023. Even GivingTuesday, which historically has been seeing 15-25% growth, was only up 0.6% year over year (before inflation).
Number of Charity Navigator Site Visitors (2011-2023)
Although the 2023 site traffic shows growth over pre-pandemic activity, it also shows a significant drop in visitors in 2023. While disappointing, this drop in traffic is not unexpected. In 2020 - 2022, Charity Navigator experienced a surge in traffic in response to the pandemic, racial injustice, and the invasion of Ukraine. 2023 showed a settling of donor activity from these extreme highs. The Charity Navigator website traffic reflects sector-wide and larger economic trends that must be taken seriously.
Expanding Ratings Coverage and Bringing Equity to Our Work
Twenty years ago, we were created to rate the largest and most popular charities in the United States. Over the last four years, our effort has been to move away from popularity and size and move towards equity, efficacy, and performance. That means opening everything up to the smaller and lesser-known, more recently established organizations. It’s a continuous effort to ensure that who we rate and how we rate is equitable across the organizations. That was a critical component of what went into the changes to the financial assessments that went live in September of 2023, the final touches to the ratings unification that had begun in November of 2022.
We are now rating more than 225,000 charities, up from 9,000 in 2020. Our primary focus is on increasing the depth of the ratings to provide donors a more holistic view of nonprofit effectiveness that goes beyond informing them where their money goes and instead shows them what their money does.
Number of Charities Rated Per Beacon
219,076 Accountability & Finance
33,389 Culture & Community
11,426 Leadership & Adaptability
2,506 Impact & Results
We are also happy to report that, through continued advocacy with other leaders in the sector, we were able to enable the republication of Forms 990 by the IRS. So over the course of the year, our Finance and Accountability ratings went from being two years out of date to being completely up to date. Now the IRS is regularly publishing Forms 990, enabling us to provide the most recent and relevant financial data.
The Giving Basket
Over time, we’ve seen significant growth in the percentage of our website visitors using the Giving Basket. This is exciting because the Giving Basket is the one-stop shop for your charitable giving, but it is also one way we are looking to rebuild trust in the social sector. We don’t charge a fee for using the Giving Basket, and it won't let you give to a fake charity.
Total Amount Given Through the Giving Basket Per Year (2015-2023)
2023 Giving Basket Data
Total Amount Given Through the Giving Basket:
$41,607,636
Charities Benefited
25,000+
Average Donor Gift
$110
Unsurprisingly, the areas of interest aligned with the major themes of the year. International humanitarian aid was top of mind due to tragic conflicts in Ukraine and Israel and Gaza. Closer to home, basic human services continued to be an area of great need and great support.
2023 Top Cause Area Lists:
International/Foreign Affairs/National Security
Human Services: Multipurpose and Other
Animal-Related
Environmental Quality, Protection, and Beautification
Food, Agriculture, and Nutrition
Our trend of decreased giving is reflected once again in the Giving Basket data, with the average donor gift down 1.78% and the number of charities benefited down 13.18%.
Curated Lists
We have three types of lists that we're promoting at Charity Navigator in 2023: Give Now, Popular Charities, and Best Charities. We create these lists to try to reduce complexity and make it easier to give. One of the biggest problems that people are facing in their charitable giving is that there's too much choice. Our goal is to refine that selection process and make it easier and faster.
In 2023, for all types of curated lists, the top 10 most visited lists are as follows:
Community Choice Awards
In 2023, we hosted our first annual Community Choice Awards. We wanted to create an opportunity to elevate and celebrate the exceptional work of top-rated charities. The nominees were selected based on four-star ratings and having earned all four beacons. The selected organizations were the highest-rated charities across various sectors and causes, grouped by size. More than 50,000 supporters cast their votes. The winners for 2023 were: United Animal Friends, Gateway Pet Guardians, Evidence Action Inc, and Patient Access Network Foundation. The Community Choice Awards allowed us to recognize and honor lesser-known, high-performing organizations.
Looking Forward
The changes and trends we saw in 2023 will impact our approach in 2024. While our mission - to make impactful giving easier for all - remains the same, the tools we use to achieve it are ever-changing.
In 2023, we acquired Causeway, a startup nonprofit dedicated to forming cause-based funds that consist of multiple charities addressing particular issues. In 2024, we are incorporating this initiative into our platform, enabling donors to contribute not only to specific charities but also to broader cause areas. These funds will empower donors to support multiple charities tackling a specific issue from various perspectives. We hope they will prove invaluable for individuals passionate about making a difference in a particular area, placing greater emphasis on the issue itself rather than the individual organizations involved.
We are also excited about the spring 2024 release of a new rating methodology, which will offer more insights into charity impact and measurement. Impact measurement is incredibly hard and doing it at scale is exponentially harder. Our new methodology will enable an organization to demonstrate that it has the capacity to measure impact and that it is doing it on its own. That opens the door for tens of thousands of organizations to be scored on the critical Impact & Results beacon.
In 2024, we will be looking at how we can use AI in a responsible and ethical way. One of the key initiatives under consideration is the development of an AI-powered search feature. Leveraging Charity Navigator's extensive data on charities alongside other relevant data sources, this tool would empower donors to pinpoint organizations addressing specific causes in precise geographic regions and catering to particular communities. This enhancement would align with our goal to provide donors with the most comprehensive and personalized information, facilitating informed decisions that maximize the positive impact of their contributions.
As we move ahead in 2024, these advancements will grow and improve our abilities to better serve donors, charities, and the world we all seek to improve. I hope that you will continue to engage with Charity Navigator as we work to build trust and support high-impact charities all over the United States.
Wishing you a healthy, joyful, and generous 2024,
Michael Thatcher
Published January 2024