Charitable giving in the United States is expected to grow by 4.8 percent in 2015 and by an additional 4.9 percent in 2016, according to The Philanthropy Outlook, a new report researched and written by the Indiana University Lilly Family School of Philanthropy. The report is presented by Marts & Lundy, a leading fundraising and philanthropy consulting firm. Projected rates of change are in 2013 inflation-adjusted dollars.
The outlook projects that the expected growth of total giving in each of those years will exceed the estimated annualized average rate of growth in total giving in the years following the Great Recession (3.1 percent) and the estimated long-term average for the 40-year trend in total giving for 1973-2013 (3.8 percent).
The nonprofit sector has a significant impact on U.S. society and the economy. Approximately 1.4 million nonprofits provide 11 percent of U.S. jobs and 9 percent of total wages. Americans gave an estimated $335.17 billion—or 2 percent of U.S. GDP—to charity in 2013, according to Giving USA 2014. Yet few resources exist for anticipating and planning for the future of giving.
“Despite the scope and impact of the nonprofit sector, it lacks the type of myriad, reliable resources that business and government have long used to understand the outlook for their sectors. Given that many nonprofits are hugely dependent on private contributions, the need for accurate projections for charitable giving is especially great,” said John M. Cash, Ph.D., chair of the board of directors and senior consultant and principal at Marts & Lundy. “The Philanthropy Outlook is based on a carefully constructed econometric model grounded in serious academic research. It is a key new planning tool for the nonprofit sector.”
The Philanthropy Outlook provides data for predicted year-to-year growth rates in U.S. philanthropy for 2015 and 2016, including overall giving and giving by individuals/households, foundations, estates and corporations. It includes context and explanations of the economic factors and conditions that will significantly influence the predicted changes in giving. It will be updated annually.
“In today’s dynamic environment, nonprofit professionals and fundraisers need reliable information about current and future giving trends to develop effective fundraising strategies. The Philanthropy Outlook enables fundraisers to gauge the future philanthropic climate and adapt to anticipated conditions,” said Amir Pasic, Ph.D., dean of the Lilly Family School of Philanthropy. “While individual results will vary from organization to organization, fundraisers can find encouragement and opportunity in these projections.”
Among the key results:
- Contributions from individuals/households, estates, corporations and foundations are all expected to increase in 2015 and 2016
- Individual/household giving is predicted to increase by 4.4 percent in 2015 and by 4.1 percent in 2016. It includes giving by both households that itemize charitable deductions on tax returns and those that do not itemize.
- Foundation giving is projected to rise by 7.2 percent in 2015 and by 6.7 percent in 2016.
- Giving by estates is predicted to increase by 2.7 percent in 2015 and by 6.3 percent in 2016.
- Corporate giving is expected to grow by 6.0 percent in 2015 and by 4.8 percent in 2016.
“While the economic and financial sector has seen greater than normal economic volatility in recent years, the projected growth in the overall economy suggests a more stable and more positive environment for philanthropy,” said Una Osili, Ph.D., director of research for the Lilly Family School of Philanthropy. “The report supports emerging evidence that improvements in the economic environment will have implications for donors and nonprofits. Importantly, though, increasing philanthropic giving will require that nonprofits have not only a positive economic environment but also a strong, clear case for support and thoughtful cultivation of donor relationships.”
According to the report, economic factors that are expected to have the most significant, positive impact on giving in 2015 and 2016 include projected growth in the S&P 500 Index, U.S. Gross Domestic Product, household net worth and personal income, among other factors. However, the report stresses that certain conditions, such as changes in tax policy or significant changes in the world or U.S. economy could affect the predictions for giving.
“The Philanthropy Outlook provides a scientifically developed and tested look ahead at charitable giving based on the expertise of Indiana University and its Lilly Family School of Philanthropy,” said Donald M. Fellows, president and chief executive officer of Marts & Lundy. “We are pleased to present this outstanding new resource as part of our ongoing commitment to informing and serving nonprofit organizations and the philanthropic sector.”
The report’s research team employed econometric methodology to develop the projections for The Philanthropy Outlook. This type of methodology tests statistical relationships between variables. The researchers tested more than 16,000 combinations of economic variables that had the potential for influencing each source of giving, ultimately identifying 10 key predictors of giving.
About the Lilly Family School of Philanthropy
The Indiana University Lilly Family School of Philanthropy is dedicated to improving philanthropy to improve the world by training and empowering students and professionals to be innovators and leaders who create positive and lasting change. The school offers a comprehensive approach to philanthropy through its academic, research and international programs and through The Fund Raising School, Lake Institute on Faith & Giving, and the Women’s Philanthropy Institute. Follow us on Twitter or “Like” us on Facebook.
About Marts & Lundy
Marts & Lundy is the one of the world’s most innovative and successful fundraising consulting firms. With nearly 40 full-time Senior Consultants and Analysts, Marts & Lundy offers clients an unparalleled depth of expertise and breadth of perspective on philanthropy. Since 1926 the firm has served thousands of clients, whose annual giving programs range from hundreds of thousands to millions of dollars and whose campaigns range from a few million to several billion. Founded in the belief that philanthropy has the power to transform not only institutions but, more importantly, the world in which we live, Marts & Lundy remains steadfastly committed to contributing innovative thinking and thought leadership to the profession of fundraising. Follow us on Twitter, LinkedIn and Facebook.