Giving has rebounded slightly in the third quarter of 2017 as compared to the half-year mark but still trails 2016 figures, according to a Fundraising Effectiveness Project (FEP) report. The number of year-to-date donors (4.8 million) and revenue ($4.7 billion) remain 5 percent and 4 percent behind 2016 numbers, respectively.
The revenue mark represents a 2-percent improvement from the 2017 half-year point as compared to 2016 while the number of donors compared to last year has remained flat since the second quarter.
FEP is a collaboration between the Urban Institute and Association of Fundraising Professionals (AFP) with data providers including Neon, Bloomerang, and DonorPerfect. A growing trend in 2017 has been the decline in major gifts as compared to mid-size and smaller gifts, according to Jon Biedermann, vice president of DonorPerfect. The $3.64 billion reported from major gift donors (those giving $1,000 or more) through Sept. 30 represents an 8-percent decrease compared to that point in 2016.
Mid-level gifts, those between $250 and $1,000, have accounted for $491 million thus far, up 20.1 percent from last year’s pace and even better than the 14.2-percent projected increase set at the year’s halfway mark. The $565 million garnered from gifts of less than $250 is up 6.9 percent from last year but down slightly from the 8.9-percent increase it held through two quarters.
Despite being several points off the 2016 pace with just a little time left in the year, Biedermann predicts that giving this year will actually exceed 2016 totals before declining in 2018. Tax reform and improvements in the S&P 500 have created a “perfect storm.”
Biedermann said that history is on his side. The standard deduction was increased the last time major tax reform was accomplished in 1986 and giving spiked that year before dying down in 1987. The standard deduction is set to roughly double in both the proposed tax bills in the Senate and House, up to about $12,000 for individuals and $24,000 for joint-filers, give or take a few hundred dollars between the two bills.
At the same time, individuals operating their own businesses are facing a tax decrease on net profits from 39.6 percent down to 25 percent, Biedermann said. In essence, there will be far greater tax incentive for donors to give this year as compared to next. A donor that might make a habit of giving $1,000 each year might instead choose to give $2,000, or close to it, at the end of this year and then give substantially less than usual in 2018 when incentives might not be as strong.
“At the end of the day, I am convinced – based on history and research – that we are going to see, in the fourth quarter, tax reform and the S&P 500 put us into the green [for 2017], substantially,” said Biedermann.