Is the Rise of Direct Person-to-Person Giving Replacing Gifts to Churches and Ministries?

Helping those in need is a biblical principle, so the increase in direct cash gifts to people struggling through the COVID-19 pandemic should come as no surprise. But is direct giving taking the place of charitable giving and tithing for Christians?

Direct person-to-person giving happens when a person learns of a need of a friend, family member, or neighbor, and gives money directly to that person to help with the need. It may be due to a health concern, unemployment, a catastrophe, or some other unexpected expense.

A recent article in The Chronicle of Philanthropy indicates that these direct gifts increased during the pandemic. Cash transfer and crowdfunding applications, like Venmo, PayPal and GoFundMe, have made direct giving quick and easy.

Those who choose to make person-to-person direct gifts seem to be motivated by two factors: personal connection and specificity.

A personal connection to the cause is often involved in the giving decision, Scott McConnell of Lifeway Research told MinistryWatch. That reason applies to both gifts to charitable ministry and gifts given directly to a person in need.

“When we see an individual suffering—and especially if we believe that individual is not responsible for their bad situation—we are more likely to respond than if we hear about a large, somewhat impersonal grouping of people affected,” Susan Mettes wrote for a study by the Barna Group.

She added that specific causes are more likely to draw the attention of givers because they understand more clearly how the gift will tangibly help.

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For some Christians, these person-to-person direct gifts are offsetting tithes.

While 83% of American churchgoers surveyed by Lifeway Research in 2018 still believe the concept of a tithe applies today, about one-third agreed a tithe can go to an individual instead of the church.

Not every church teaches on tithing in the same way, McConnell pointed out. Some may distinguish between giving to the church and giving aid to individuals, but Lifeway has not surveyed pastors about their specific teaching.

Lifeway also found that more than half of churchgoers gave the same percentage of their income to their church in 2020 as in 2019 while about a quarter gave less during the pandemic year.

The impact on churches financially has varied during the COVID-19 pandemic, with some churches hit harder than others. “I’ve heard from a lot of churches that benefited because people had more disposable income,” McConnell said. Disposable income is one of the strongest correlations when it comes to church giving trends, he said.

In its analysis of giving trends in 2020, the Lilly Family School of Philanthropy at Indiana University found that total charitable giving increased by over 5%. However, religious groups only saw an increase of 1%.

“While still the largest subsector at 28% of total giving, the overall percentage has continued to decline rather drastically over the past few decades,” the group’s newsletter says of giving to religious groups.

One reason for decline has been an erosion of trust in institutions of all kinds, including non-profit and philanthropic groups.  A recent survey by the Independent Sector found that confidence in non-profits has declined, and has declined the most among millennials and Gen-Zers.

The Internal Revenue Service does not offer tax deduction benefits for direct person-to-person gifts. Even a “pass-through” gift given to a charity and “earmarked” for an individual is not tax-deductible, according to the Evangelical Council for Financial Accountability.

Josh Whelan, a financial advisor with Alterra Advisors in Bellevue, Washington, includes person-to-person giving options in his work with clients who are interested in ways to engage and help those in need.

He first worked with a retired couple in 2019 who were looking for a way to make a difference and weren’t too concerned with the tax deductions available when making a donation to a nonprofit.

He helped them create a charitable giving plan they’ve implemented during the pandemic.

“They’ve been thrilled with being able to help without the tension of wondering if they would need the resources in the future,” Whelan told Ministry Watch. “It was cool to see them be entirely prepared with an earmarked fund and ready to help.”

While it is difficult to track person-to-person giving via cash applications like Venmo, GoFundMe claims “[i]n 2017, social fundraising on GoFundMe resulted in over 1 billion visits from over 491 million users, which translates to over 31 visits per second.”

Sharing direct giving opportunities on social media can instigate giving. One social media share will raise an average of $13 in donations to a GoFundMe campaign.

Direct donations via cash apps are not foolproof, however. Venmo warns about possible scams associated with direct cash transfers. “A scammer may change their username and profile picture to impersonate someone you may know personally.” They advise users to double check with the friend to verify that the request is genuine.