From How Much to Where Money Is Donated, Inflation Could Affect Charitable Giving

By now your inbox — and likely your phone and social media feeds — have been flooded with requests to donate to a charitable cause on Giving Tuesday.  

The day comes on the heels of other spending days: Black Friday, Small Business Saturday and Cyber Monday. Researchers say despite the pandemic and inflation concerns this year, people are still giving their money — but cautiously.

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Patrick Rooney, a professor of economics and philanthropic studies at Indiana University’s Lilly Family School of Philanthropy, says charitable donations tend to move in the general direction of the economy.

“They’re a little pro-cyclical, that is that they move in the same direction but in a more advance manner such that in good years philanthropy is very good, and in bad years its worse than the economy overall,” he said.

Rooney says it’s too soon to say how 2022 will shake out given the current economic climate.

Another factor that makes it hard to predict how charitable donations will fare this year is that more than 20% of donations for any given year tend to happen in the last quarter.

Angela Lee, a professor of marketing at Northwestern University’s Kellogg School of Business, says charities will be wise to tap into their previous donors rather than spend resources trying to get new ones.

“When people are cautiously generous, they feel more confident and comfortable giving to charities that they have been supporting,” Lee said.

Laurie Styron, executive director of Charity Watch, says there are over 1.5 million nonprofits in the United States and doing a deep dive into all of them can be time consuming. When it comes to deciding if your charity of choice is spending your donation wisely, she has a few tips to follow.

“Understand that there is a difference between legitimate and efficient. Legitimate just means that it’s registered with the IRS and state agencies to be able to solicit and to exist, it doesn’t mean that it will use your donation efficiently and effectively,” Styron said.

She recommends being weary of familiar sounding names as many scammers involved with inefficient organizations will ride the coattails of major organizations.

It is also recommended that you use a credit card when making a donation because this will allow you to dispute a charge if need be, Styron said.

Note: This article will be updated with video.

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