Inflation Is Straining the Charitable Sector

(Patrice Onwuka, RealClearWire) Inflation accelerated once again last month to a 40-year high as the Consumer Price Index rose 9.1% from one year ago, forcing poor, elderly and middle-class Americans to confront harsh realities to pay for necessities.

Today, it costs 12.2% more to put food on the table at home, about 60% more to drive to work and 2.8% more to take public transit than it did just last year. Families are turning to food banks for help in unprecedented numbers, with donors and foundations rising to meet the challenge. But even charitable dollars can’t escape the corrosive impacts of inflation. In this land of plenty, 2022 may be the hungriest summer on record for Americans up and down the income scale.

According to Feeding America, 53 million people turned to food banks, food pantries and meal programs in 2021, one-third more than prior to the COVID-19 pandemic, when millions of Americans relied on food banks – some for the first time – as workers lost jobs or were temporarily unemployed. Today, many people are back to work, but real wages, or inflation-adjusted pay, keeps falling, as grocery prices rise. Again, food banks are seeing long lines for help and reporting spiking demand.

Most households have begun to alter their spending decisions because of inflation. However, inflation is robbing the most vulnerable in our society, such as those with low incomes or on a fixed budget, of the dignity to live a normal life. Since proportionately, they spend more of their budgets on groceries and energy, price volatility triggers food insecurity and forces them to make existential choices. Consider the dire stories that church food pantries hear of people contemplating suicide or not eating for days. Food banks and pantries are as critical as ever to help them meet their most basic needs.

In America, our civil society springs to action whenever people are in need. As with other crises, shelters, food pantries and feeding programs, soup kitchens and other direct service organizations have stepped up their distribution to meet the burgeoning demand from clients up and down the income ladder. In turn, they depend on gifts from private individuals and foundations to meet those needs. Yet these frontline aid workers are also being squeezed by inflation from different directions.

Sadly, inflation is allowing givers no rest. Rising food and gasoline prices make it costlier to deliver goods and services. For example, in California, the Alameda County Community Food Bank’s expenditures jumped from a pre-pandemic monthly average of $250,000 to as high as $1.5 million. Supply chain disruptions that plagued our economy still persist as well, prompting organizations to find ways around securing food items for distribution or implementing rationing on staples like meat.

Wages are rising, but this benefit – although good for workers – places greater pressure on nonprofit budgets. Organizations must offer their employees more money to stave off staff departures, especially in a jobs market with over 11 million unfilled positions. Every additional dollar allotted for salary is a dollar less for services.

In the meantime, inflation threatens to impact overall giving to charity as well. The generosity of the American people has been a stopgap for surging demand during the pandemic and other crises. While megagifts by wealthy donors attract headlines, they only account for about 5% of individuals giving to our charitable sector.

In fact, giving is actually a part of life for Americans of all walks of life. About six out of 10 U.S. households donate to charity in a given year. Individuals gave $484.85 billion to charities in 2021 according to Giving USA, 4% more than 2020 but a negative 0.7% when adjusted for inflation. This represents two thirds of overall giving to the constellation of organizations that comprise our civil society – from churches to soup kitchens to research institutes.

Unfortunately, rising prices reduce the value of each dollar donated, eroding donors’ giving power. Even more concerning, giving levels could cool over the uncertainty of inflation. Levels of consumption seem to be leveling off and Americans are dipping into their savings to just maintain their quality of life.

A pullback in giving now would have devastating consequences: leaving nonprofits with fewer resources and hungry bellies empty.