Charitable giving in the United States is projected to grow by 4.8 percent this year and by 5.1 percent in 2021, according to a new report.
The Philanthropy Outlook 2020 & 2021, released yesterday, is researched and written by the Indiana University Lilly Family School of Philanthropy at IUPUI and presented by Marts & Lundy, a Lyndhurst, N.J.-based strategic fundraising consulting firm.
Last year’s Philanthropy Outlook projected total giving to increase 3.4 percent in 2019 and 4.1 percent in 2020, driven by foundation and estate gifts. Giving by individuals was predicted to grow 2.1 percent in 2019 and 3.4 percent in 2020.
“Our research indicates that if U.S. economic growth remains steady, 2020 and 2021 are likely to be good years for charitable giving overall. The estimates for this year and next year anticipate solid growth in most sources of giving,” said Una Osili, Ph.D., an economist who is associate dean for research and international programs at the Lilly Family School of Philanthropy. “If the U.S. economy continues to be strong, we expect that charitable giving will also follow this trend, even recognizing that there may be more uncertainty in the global economy,” she said via a press release announcing the findings.
The disparity between last year’s projection for 2020 (4.1 percent) and this year’s report (4.8 percent) comes down to updated data on things like personal income and Gross Domestic Product (GDP). Those numbers are updated between the release of last year’s report and this year’s report, Osili said.
“As those underlying aggregate numbers are provided, mostly through government sources, we’re using the most recent estimates, not what it was last year,” she said. “That can lead to slight revisions but taken together, this year’s estimate is higher because the numbers are slightly higher than what it would have looked like this time last year,” Osili said. Talk about the risk of recession last summer receded and the stock market rebounded in 2019 after a volatile end to 2018. Economic data for households — whether it’s the stock market, labor and housing markets prices — for the most part have been very positive, she said.
In the latest report, giving by individuals is projected to grow 4.4 percent in 2020 and 4.7 percent in 2021, slightly less than the rate for total giving.
Giving by foundations and giving by estates are expected to have the strongest growth in 2020, up 6.3 percent and 6.6 percent, respectively, followed by 6.6 percent and 6.5 percent, respectively, in 2021. Giving by corporations is expected to be essentially flat, up just 0.4 percent in 2020 and 1.4 percent next year.
As far as recipients, health organizations are projected to have the highest growth, up 7.9 percent and 7.3 percent in 2020 and 2021, respectively, followed by education, which is expected to increase 5.1 percent and 5.5 percent, respectively. Public-society benefit organizations will be trail slightly, at 5.1 percent and 5 percent in 2020 and 2021, respectively.
The Philanthropy Outlook estimates are produced using recent economic data and rigorous analysis that takes into account factors that will affect charitable giving. The outlook develops projections for total giving, giving by source and giving to three types of recipient nonprofits and describes how different economic variables and other factors will impact giving in 2020 and 2021.
This edition of The Philanthropy Outlook presents a “stress test” for 2020 and 2021, using characteristics similar to those experienced during the Great Recession of 2007-09, to see how charitable giving would change as compared with The Philanthropy Outlook 2020 & 2021 results. The point of the stress test is not to predict the likelihood, length, or severity of a potential recession.
Rather, much like the Dodd-Frank Act Stress Test for banks, the stress test analysis gives nonprofits and fundraisers an opportunity to consider how their organizations might fare under severely adverse conditions, and to identify areas to strengthen and improve for long-term stability, enabling them to plan ahead for possible future downturns while economic times are good.
It’s still important to realize what a slowdown of any kind could mean, she said, which is why there’s a section around the stress test in this year’s report. “Risk can be a very important planning tool,” Osili said.
The full report is available at www.philanthropyoutlook.com