IU Projects Two Years Of Robust Giving

January 13, 2017       Andy Segedin      

Total giving is projected to increase by 3.6 percent during 2017 and another 3.8 percent in 2018. Though the increases do not match 25-year averages of 4.4 percent year-over-year growth or the 4.9 percent 40-year average, they signal improvement compared to the doldrums of the past decade.

Since 2007, the recession-hit economy has helped lead to average year-over-year growth of 0.5 percent.

The prognostications are from “The Philanthropy Outlook,” conducted by the Indiana University Lilly Family School of Philanthropy and presented by the consulting firm Marts & Lundy. The projections are based on inflation-adjusted 2015 dollars and existing tax policies, according to Una Osili, Ph.D., director of research and professor of economics and philanthropic studies at the university.

Economic markers such as the S&P and gross domestic product (GDP) remain key indicators of the overall economy and household wealth. They correlate with individual giving – which is projected to account for just more than 70 percent of overall giving in each of the next two years, according to Osili. The report cites projected improvements in the overall economy as a driver in projected growth in giving across giving methods, with Osili pointing out that foundations, corporations and bequests are still all people driven.

“Building relationships with donors is still at the heart of philanthropy,” Osili said. “Some of the same fundamentals are important even in this uncertain political climate…there are still factors and variables that are important in driving results for organization.”

Other projected growths in giving include:

* The will be increases of individual and household giving by 3 and 3.2 percent, respectively, for 2017 and 2018. Individual giving growth has been at -0.1 percent for the past 10 years, 3.4 percent year-to-year during the past 25 years and 3.9 percent over the past 40 years;

* Foundations will increase giving by 5.9 percent in 2017 and 6 percent in 2018. Year-to-year growth in foundation giving has been at 4.9 percent for the past 10 years, 13.8 percent for the past 25 years and 17.6 percent during the past 40 years;

* Bumps in estate giving of 5.4 percent in 2017 and 5.2 percent in 2018 for projected. During the past decade, year-to-year growth has been at 0.9 percent, with 25- and 40-year averages standing at 6.3 percent and 5.6 percent, respectively; and,

* Corporate giving is projected to increase by 2.4 percent in 2017 and 2.7 percent in 2018. Corporate giving has been flat during the past 10 years as compared to 25- and 40- year averages of 3.5 and 6.6 percent.

The crevasse created by the most recent national recession remains a factor in giving as philanthropy rises up beyond recent averages, but fails to reach past levels. “The overall picture is that there has been recovery, but not all donor segments and groups have recovered at the same pace,” Osili said. This includes both trends such as foundations growing more rapidly than individual giving, for instance, as well as varying growths among different sects of individuals.

The white elephant facing economic policy at the moment is the incoming administration, the potential policies of which are not factored into the projections, Osili said, citing the difficulty in making projections based on policies that have yet to be detailed.

There are generally two types of political factors that impact giving, she said – policy proposals such as tax cuts and changes in charitable deductions and broader changes such as drivers impacting financial, labor and housing markets. While the impact of a Trump administration could have clear impacts on the overall economy earlier on, how policies such as tax cuts impact giving are unlikely to show themselves until 2018 and beyond, she said.

In addition to the fate of various policies and the economy, Osili predicted that technology will be another important driver in broader changes in philanthropy in the years to come, facilitating peer-to-peer opportunities, spurring innovation and helping organizations raise awareness around their causes among new and younger prospective donors.

“Broadly speaking, demographics are changing with Baby Boomers facing retirement,” Osili said. “How to build a support base with new donors will be important over time.”

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