According to Dictionary.com, the word "niggardly" is defined thusly:
niggardlyAccording to the Online Etymology Dictionary, its etymology is thus:
1. reluctant to give or spend; stingy; miserly.
2. meanly or ungenerously small or scanty: -- "a niggardly tip to a waiter".
3. in the manner of a niggard.
niggard (n.) "mean person, miser," late 14c., nygart, of uncertain origin. The suffix suggests French origin (see -ard), but the root word is possibly from earlier nig "stingy" (c.1300), perhaps from a Scandinavian source related to Old Norse hnøggr "stingy," from Proto-Germanic *khnauwjaz (source of Swedish njugg "close, careful," German genau "precise, exact"), and to Old English hneaw "stingy, niggardly," which did not survive in Middle English.
Because it is so close in pronunciation -- or in hearing at least -- to the notorious "n-word", it has pretty much fallen out of polite conversation. I am language scholar enough to realize that words fall out of our vocabulary all the time. The "ruth" in "ruthless" for example, was in use just a hundred years ago or so. It's still a word that exists, but it might as well not since no one uses it except as the first part of its negative, ruthless. The "gruntled" in disgruntled is another that exists only in its negative. When was the last time you heard of anyone who was "gruntled" except in the form of some semi-clever wordplay?
All languages change and grow over time. New words are added, old words are cast aside and fall out. I really can't get exercised over the loss of "niggardly" -- if it is routinely heard by black people as a racist term, it ought to be retired.
Once I had a black woman on my staff come up to me completely pissed, livid, that our computer geek had used the word in her presence. I think I handled it pretty well, given the circumstances. I led her over to the office dictionary and together we looked it up, she found that there was nothing racist about it, neither in the word itself nor in its etymology. And that pretty much defused the situation, but it was a signal to me to watch my own language for these kinds of accidental racisms, words which are in context not racist at all but that sound racist to a hearer who was already attuned from birth to routinely hear the "N-word" coming out of a white person's mouth.
So it is good bye to "niggardly". It is, in fact, still a perfectly usable word, but it freights too much unintentional baggage to be used in a conversation. Probably not in written communications, either.
And it is of course even worse with the base of the word, "niggard", a noun for someone who is niggardly. That is even more likely to be misheard and misinterpreted.