Holiday donations to food banks and toy drives dwindle due to inflation: 'People pull back'

The holidays have traditionally been an occasion when Americans donate volunteer time and funds to charities and families in need, but inflation and economic uncertainty have noticeably lessened donations this year.

"There are a number of factors weighing on nonprofits' ability to serve their communities right now," said Rick Cohen, chief communications officer and COO at the National Council of Nonprofits in Washington, D.C.

The National Council of Nonprofits is the nation's largest network of charitable nonprofits with more than 25,000 organizational members throughout the U.S.

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"Nonprofits are facing the combination of increased costs, decreased resources, increased demand for their services and a massive workforce shortage, all of which combine to make it harder to keep up with that demand for their help," Cohen told FOX Business. 

Cohen said nonprofit organizations that provide services to the public are struggling to keep up with increased demand.

A survey released by the U.S. Federal Reserve in November noted that approximately 70% of public service nonprofits have seen an increase in demand compared to last year, and 43% said they've seen a "significant increase."

Forty-five percent of nonprofits said they believe they could "meet most of their demand" when the survey was administered in August. 

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Inflation, labor shortages, childcare and lingering adverse effects from the COVID-19 pandemic were cited as "top challenges" nonprofits face, according to the Federal Reserve.

Qgiv, Inc., a nonprofit fundraising software company based in Lakeland, Florida, reported that charitable donations made on Giving Tuesday (Nov. 29) increased by over 5% compared to 2021, but there was a 4% decrease in the average donation amount, which went down to $151. 

Charity Navigator, a Glen Rock, New Jersey, nonprofit charity assessment group that evaluates hundreds of thousands of charitable organizations in the U.S., saw a similar monetary decrease on Giving Tuesday, according to The Morning Call, a local Pennsylvania newspaper that serves Leigh Valley and Allentown residents.

The Charity Navigator Giving Basket reportedly decreased by 9% from last year, with Americans donating $118 on average.

Food banks and toy drives are two sectors that appear to have been hit hard by declining donations as Christmas approaches.

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The Salvation Army, a leading international Protestant church charity, has had various locations in the U.S. say holiday donations have fallen short as demand has heightened.

In recent weeks, Salvation Army locations in New York City; Central Maryland; Massachusetts; Charleston, West Virginia; North Augusta, South Carolina; and Pocatello, Idaho, have reported they are at risk of not meeting their "Red Kettle" fundraising goals.

The organization’s iconic Red Kettle donations help fund Christmas services, including food, toys, clothing and practical gifts, according to The Salvation Army’s Red Kettle Volunteer website.

Similarly, food and toy donations have decreased in Detroit; San Mateo, California; Palm Beach County, Florida; Minnesota; and North Dakota, according to multiple local reports.

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"We have seen in the past how, when there are economic challenges in the country, nonprofits are usually the first ones affected and the last to recover," Cohen said. "That comes from both that increased demand for their services as people are out of work and/or are having more trouble making ends meet, as well as decreases in donations."

"Much like people are instructed on an airplane to put their own oxygen mask on before helping others, we see that sort of phenomenon when there are economic challenges," Cohen continued. "People pull back on donations if they are worried about keeping a roof over their head or food on their table."

Inflation has also taken a toll on nonprofit operations, according to Cohen.

He said nearly one-third of public service nonprofit revenues come from government grants and contracts, but many contracts haven’t been adjusted to cover rising costs.

Increased salary competition has made it difficult for nonprofits to keep and grow teams to meet demand, Cohen explained.

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"Nonprofits are the third-largest employer in the country, with more employees than the finance or construction industries," Cohen said. "But, unlike many for-profit industries, we can't raise prices to cover increased labor costs. So, inflation in that area hurts as well, with it becoming more difficult to recruit and retain the staff we need."