How Does Giving Tuesday Work?

Kelly Stecklein CFP, MBA, MSF

President, Wealth Advisor & Coach

Wealth Evolution Group

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By DANIEL KURT

Dec. 1, 2020

Giving Tuesday is a global initiative that encourages individuals and organizations to donate their time and money to charitable causes on the Tuesday following the celebration of Thanksgiving in the U.S. The initiative was created in 2012 as a joint project of New York City’s 92nd Street Y and the United Nations Foundation.1 With its focus on altruism and awareness of those in need, the movement is a counterweight to the consumerism embodied by the events that immediately precede it on the calendar: Black Friday and Cyber Monday.2

KEY TAKEAWAYS

The Giving Tuesday initiative was started in 2012 as a way to encourage people throughout the world to focus on altruism, whether by making financial donations or by doing good in one’s community.
In 2019 the event helped raise nearly $2 billion in total charitable contributions for nonprofit organizations.
The Giving Tuesday organization helps promote contributions to outside charitable groups, but it does not collect donations on their behalf.

What Is Giving Tuesday?

Leaders at the 92nd Street Y in New York City—92Y, for short—launched Giving Tuesday as an effort to focus individuals on benevolence during the early holiday season, when sales events such as Black Friday and Cyber Monday often command the public’s attention. The idea was to unleash a wide array of charitable efforts, from organizing local food drives to making donations that support anti-hunger initiatives worldwide.

Asha Curran, 92Y’s chief innovation officer, and Henry Timms, currently the community center’s executive director, traveled the country in 2012 in order to promote the idea, according to a 2018 New York Times article. The center was able to draw vital support from the United Nations Foundation, which became the initiative’s other cofounder.1

Within just a few years, the idea has gained a large following, spurring billions of dollars in financial donations to nonprofits worldwide. The hashtag #GivingTuesday has become a popular tool to inspire generosity among social media users, generating 20.1 billion impressions in 2019, according to Rotary International.3

Giving Tuesday spun off from 92Y in 2019, becoming an independent organization with Curran serving as its CEO.1 According to its website, the organization’s goal is “to create a more just and generous world, one where generosity is at the heart of the society we build together, unlocking dignity, opportunity and equity around the globe.”2

Decentralized Structure

From its start, Giving Tuesday has seen its mission as encouraging altruism, both through personal efforts and by giving one’s time and resources to nonprofit entities. It provides various resources—including organizing and communication tools—to assist nonprofits that participate in the event.4 However, the Giving Tuesday organization does not receive funds on behalf of charitable entities, which receive any donations directly.2

According to the Giving Tuesday website, organizations can capitalize on the awareness generated by the event in a number of ways, whether it’s creating volunteer-driven events, developing fundraising campaigns, or hosting guest speakers.2 It also encourages businesses and nonprofit groups to amplify the message of giving back by using the hashtag #GivingTuesday on social media.

The movement has also fostered the development of philanthropic efforts tailored to local needs and specific minority groups. According to its website, more than 225 Giving Tuesday communities have sprouted up in the United States, including groups using the hashtags #GivingBlackTuesday, #iGiveCatholic, #GivingTuesdayLGBTQ and #GivingTuesdayMilitary.5

Global Impact

More than 2,500 nonprofit organizations took part in Giving Tuesday in its initial year, raising approximately $12 million in funds through online donations.6 Since then the movement’s impact has increased dramatically, with the 2019 event helping to generate $511 million in online donations and nearly $2 billion in total donations in the United States alone, based on the organization’s data.7 The day has developed into a global phenomenon, with more than 60 countries claiming their own national Giving Tuesday movements.8

A number of key corporate and philanthropic partners have helped bolster donations by offering matching funds on individual donations. In addition to serving as a means of making donations online, PayPal contributed more than $1 million to Giving Tuesday recipients in 2019 through its matching commitment.9 Meanwhile, Facebook has added the option of “Donate” buttons to its profile page for nonprofits, and for the third consecutive year it is pledging $7 million in Giving Tuesday matching funds in 2020. The social media giant says it will match 100% of the first $2 million donated on its platform and 10% on the remaining $5 million; the matching funds will begin Dec.1, 2020, at 8 a.m. ET.10 11

In response to the COVID-19 pandemic, the organization created #GivingTuesdayNow, an event that took place on May 5, 2020, in order to spur donations, civic engagement, and volunteerism to combat the health crisis.12 According to the group’s numbers, the one-time event raised more than $503 million in online donations and spawned a social media presence in more than 145 countries around the globe.13

Tax Deduction for Donations

Taxpayers who itemize their deductions have an extra incentive to make contributions on Giving Tuesday and at other points throughout the year, as those donations reduce their taxable income. The number of households who itemize shrank considerably after the Tax Cuts and Jobs Act, which eliminated many individual deductions and nearly doubled the standard deduction, went into effect in 2018.14 According to preliminary data compiled by the nonprofit Tax Foundation, only 9.6% of American filers itemized their deductions in 2019.15

Contrary to some predictions, it appears that the tax bill did not have a large adverse effect on individual giving. The Tax Foundation reports that Americans gave almost $450 billion to philanthropic causes in 2019, the second-highest amount ever when adjusting for inflation.16

Thanks to some changes made regarding 2020 federal taxes, at least some of the tax incentive for making charitable contributions has returned. Under the relief package known as the CARES Act, the Internal Revenue Service (IRS) is allowing up to $300 of qualified donations to be used as “above the line” deductions, which means even filers who use the standard deduction can receive a tax benefit.17 Amounts in excess of $300 may not be carried forward as a deduction in subsequent tax years.

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