Charitable contributions in the U.S. climbed to a record $592.5 billion in 2024, bolstered by a strong stock market – but the nation’s nonprofit sector is grappling with a troubling shift: fewer everyday donors and shrinking government support.

Giving USA Foundation’s 2025 annual report shows total giving grew 6.3% in current dollars – 3.3% after adjusting for inflation.

All nine recipient subsectors also saw an increase in donations in current dollars, although when adjusted for inflation, giving to foundations remained flat and giving to religious nonprofits slipped slightly.

“Giving was up, and nonprofits were well positioned coming into 2025,” said Wendy McGrady, chief executive of Giving USA. “A lot of major gift donors are taking their money not from their checkbook, but from their assets. When you look at the market and you see last year, it was up over 23.3%, you see why last year was such a great year.”

While individuals still provide the majority of charitable dollars, their dominance is gradually slipping. A decade ago, individual donors accounted for roughly 72% of total giving, today they make up about 67%, the Giving USA report showed. Foundations have steadily filled some of that space, rising from about 16% to nearly 20%, while corporations and bequests remain comparatively small slices.

Overall, “we’re seeing dollars up, donors down,” said McGrady.

Loss of donors … and dollars

According to Giving USA’s Generosity Commission report, in 2008 65% of households reported donating to nonprofits. However, that share had dropped to about 49.6 % by 2018. The decline has been concentrated within a few demographics, with age emerging as one of the strongest predictors of giving.

Nonprofits of all sizes have felt the impact, but smaller organizations – which make up most of the sector – have experienced a more pronounced loss of donors and dollars. About 88% of nonprofits operate with budgets under $500,000.

“The donors that we’re losing are generally the zero to $100 donors and the $100 to $500 donors,” said McGrady. “Those are the ones that are impacted by the price of eggs and gas. They have to make choices. Some of them dropped out during the pandemic and we’re not seeing them return.”

A loss of smaller donors means fewer people building giving habits, leaving charities more reliant on a narrow base of affluent households and institutional funders. The shift increases competition for major gifts and makes revenue streams more volatile. A downturn in the stock market or a shift in large donors’ priorities could ripple across community-based organizations.

This vulnerability has deepened as President Donald Trump’s administration tightened eligibility and oversight for many federal grant programs – a shift that has left thousands of nonprofits competing for private dollars. About 27% of U.S. nonprofits receive direct federal grants, according to the Urban Institute’s Nonprofit Trends & Impacts survey.

“That’s about 100,000 nonprofits,” said McGrady. “And of those 100,000 nonprofits, 35% of those get 50% or more of their revenue from those grants. There’s a big number of nonprofits that have had big chunks dropped out of their budget.”

Filling the gap

A May report by Candid, a leading U.S. nonprofit data and research organization, found that if government grants to nonprofits – about $303 billion annually – disappeared, private foundations will have to increase their grantmaking by 282% to fill the gap.

Meanwhile, changes in federal grant eligibility could erode funding just as the need for social services spikes. Some organizations are experimenting with ways to diversify revenue, but those new approaches can be difficult for small staffs to execute. The next few years could test whether nonprofits can pivot fast enough.

Another powerful shift is the way donors are giving. More individuals are channeling contributions through donor-advised funds (DAFs), which have surged in popularity over the past decade. DAFs allow donors to set aside money in high-income years and distribute grants later, but funds can sit for long periods before being deployed.

Giving USA notes that while DAF assets have reached record highs, payout timing remains uneven, leaving some nonprofits waiting longer for dollars to flow.

According to the National Philanthropic Trust’s 2024 DAF Report, assets held in DAFs at national charities reached $174.7 billion in 2023, a 13% jump from the previous year. Contributions flowing into those funds totaled $45.4 billion, while grants paid out to charities hit $54.8 billion – representing an average payout rate of 22.8%.

DAFs now account for roughly one out of every six dollars of individual charitable giving, underscoring their role as a vehicle for affluent donors. But because donors can delay distributions, billions of philanthropic dollars can remain stalled.

This surge in DAF could change how nonprofits plan their budgets. Because gifts can be committed one year and distributed later, organizations often face uncertainty about when pledged funds will actually arrive. Fundraisers may have to rethink donor cultivation strategies, build longer pipelines and invest in experts to adapt to this more complex landscape.

Reshaping the giving landscape

As of February, donors had committed over $650 million to wildfire recovery efforts, the Los Angeles Times reported. While vital for rebuilding, that outpouring is reshaping the local philanthropic landscape – pulling dollars that might otherwise support ongoing community programs.

With fewer donors available to sustain local causes, it’s becoming more important than ever for Los Angeles-based nonprofits to craft their narratives and cultivate relationships with high-net-worth individuals.

“Most of those donors have relationships with organizations, they’re not just picking one,” said McGrady. “You do need to stand out, you do need to be a good storyteller and you need to be effective in the way that you’re putting that story out there.”

Yet even as she urges nonprofits to sharpen their messaging, McGrady noted that she’s encouraged by what history shows about Americans and their generosity amid the hard times.

“I’m optimistic because when I look back historically at crises, giving dipped, but it quickly recovered,” she said. “Somehow we, as a nation, have decided that we are going to be generous.”