Many large nonprofits saw big spikes in donations as they closed out 2016, with the surges primarily driven by growth in the stock market and the strength of the economy — as well as concerns about potential changes in tax laws.
Some charities and fundraising consultants said that large gifts came in steadily throughout the holiday season. Donations of stocks and other assets, like property, increased for many charities, too, as asset values continued to rise.
Although donations always increase toward the end of the year, many observers say the effect was more pronounced last year than usual.
It’s hard to know exactly how many charities benefited from the strengthening national economy. Some experts say many small and mid-size organizations and nonprofits in areas where economic growth has been slow probably saw less of a boom, or even decreases in giving.
“There’s going to be disparity based on region and how different regions are growing, especially for the small organizations that depend on the local economy more than others do,” says Phil Hills, president of Marts & Lundy, a fundraising-consulting firm that primarily advises colleges, hospitals, and other large nonprofits.
Rosy Projections
Online giving continued its upward climb. PayPal reported 11 percent growth in charitable giving online in 2016, processing $7.3 billion in contributions. That includes more than $971 million raised during the holiday season alone. The online-fundraising dollars that Network for Good processed jumped 19 percent in 2016 and 10 percent in December.
Mobile giving gained in popularity, too. Twenty-one percent of gifts made through PayPal this holiday season came through a mobile device. Mobile gifts increased 12 percent over all in 2016, the company said.
Some experts expect donations to grow in 2017. A recent forecast predicted that charitable gifts will increase by 3.6 percent this year as long as the economy and stock market continue to grow.
Some nonprofit leaders, however, fear that a downturn in the stock market and the economy may be coming in the near future. Many are also worried that some of President Trump’s policy positions could hurt them — particularly his promises to cut federal spending.
Election Boosts Giving
November’s unexpected election results spurred donations to some charities during the 2016 holiday season.
Progressive-leaning nonprofits, like the American Civil Liberties Union, Planned Parenthood, and the Natural Resources Defense Council, raised significant amounts from people anxious about changes at the federal level.
“We made it clear that we believe the new American administration would most likely retreat” from supporting human-rights groups, says Robert Bank, president of the American Jewish World Service. “That’s making our work all the more necessary,”
The charity raised $21.5 million from individuals and foundations in the first eight months of its fiscal year, which started in May 2016. That’s $500,000 more than it expected to raise during that period for core operations.
In addition, the charity raised more than $800,000 for disaster relief and $1 million from its November gala and is closer to the $18 million it aims to raise for its reserve fund. It also renewed a three-year, $15 million foundation grant for a special program on child marriage in India.
Other organizations that anticipate clashes with the new administration say they are going to maintain a tough posture toward Mr. Trump in 2017. Some groups say appeals that mention the president attract more donations than those that do not.
Tax Changes
During the final months of 2016, many donors seemed to accelerate gifts they were planning to make over the next few years, charities say.
That’s largely because tax cuts proposed by Mr. Trump and congressional Republicans will reduce the tax savings donors can get from charitable deductions in the coming years. Giving incentives might also be rolled back as part of a tax overhaul, experts say.
The uncertainty over the direction of tax policy — along with growth in the value of stocks and other assets — appear to have especially boosted contributions to organizations that offer donor-advised funds. People who contribute to such accounts get immediate tax benefits but can decide later which charities they want to support.
“It’s very convenient,” says Kim Laughton, president of Schwab Charitable, which saw a 24 percent increase in dollars contributed to its donor-advised funds in 2016.
Schwab account holders also increased the number grants made to charities by 41 percent in 2016 over 2015, with 61,000 charities benefiting from more than $1.5 billion in gifts.
Ms. Laughton thinks charities still can urge donors to accelerate contributions in 2017 because of possible changes in the tax code — which will likely go into effect in 2018 or later.
In late November, Schwab told account holders in an email about the possibility of limits on the charitable deduction and other potential changes that were leading some donors to add more to their accounts so they could “realize the significant tax benefits now.”
Holiday-Season Nonprofits
Charities traditionally associated with the holiday season did well, too.
The Marine Toys for Tots Foundation distributed 18 million toys to children. Although it’s still tallying final fundraising numbers, officials say the group will end the year with about $11 million in gifts from corporate sponsors and $25 million worth of toys from companies in 2016. The charity also raised roughly $23 million though direct mail and $4.8 million online.
In 2017, the organization will try to sign agreements with as many new corporate sponsors as it can and maintain its close relationships with companies like Toys “R” Us, Disney, and Hasbro, says Ted Silvester, vice president for marketing and development.
The foundation also hopes to gain more young donors in the coming years, Mr. Silvester says. To that end, it plans to increase its social-media presence in the hopes of gaining a larger following. It currently has about 94,000 followers on Facebook and 7,000 Twitter followers.
Cash Crunch
Not all charities boomed in 2016.
Although not all of its branches have reported figures, the Salvation Army expects the 2016 fundraising haul to be slightly down from 2015.
The main issue holding the charity back is the decline in retail traffic, says Lt. Col. Ron Busroe, national spokesperson for the Salvation Army.
“We’re becoming more of a cashless society, and the Red Kettle is very much a cash opportunity,” he says, of the organization’s signature holiday giving campaign.
The charity’s southern region tends to raise more than any other, he says. That’s thanks to the number of Walmart stores in those states, which tend to be the most lucrative positions for kettles.
Mr. Busroe says he expects the national board meeting this month will focus on ways for people to make donations even if they don’t have cash. Some regions have already tried using QR codes and credit-card swipers, but much more work must be done to make those efforts successful, he says. He hopes the charity will be ready to test new giving technologies in select cities in 2017.
Overall online giving grew 3 percent in 2016 — less than fundraisers had hoped. Its Red Kettle Reason drive, in which supporters raise money from people they know, was a bright spot for the organization. The online campaign brought in 29 percent more than in 2015.
Small Nonprofits Struggle
Although many large, national organizations did well in the holiday period and in 2016 over all, some nonprofit leaders noted that it’s unlikely the same growth was seen for many small nonprofits or for organizations in regions of the country where economic recovery has been slower — like the Rust Belt and much of the South.
Many small and midsize nonprofits don’t have large enough fundraising offices to attract significant money, says Tim Delaney, president of the National Council of Nonprofits. “The big gifts go to the big institutions,” he said.
Mr. Delaney said many nonprofits are struggling to bring in dollars and depend on government funding that is largely inadequate. “It’s a lot more pervasive than people realize,” he says.
Hope Harbor Children’s Home and Family Ministries in Claremore, Okla., saw its fundraising from individuals slide by about $24,000 in 2016, although the support it receives from local churches increased by $50,000.
The group, which offers housing and a behavioral program for at-risk youths and counseling services for parents, brought in a little over $1 million in 2016.
The group, which is affiliated with a local church, will hold a board meeting soon to discuss how it can raise more money from individuals, which make up about 70 percent of its support, says Chris Brill, director of development, who helps raise money for the organization.
Some of the biggest challenges for the charity, which receives no government money, will be attracting younger donors and competing with similar organizations that have popped up over the past few years, says Mr. Brill.
The nonprofit is considering hiring someone full time to monitor its social-media accounts. “We realize that’ll be an important way of keeping in touch with” young people, Mr. Brill says.
The nonprofit will also hold more marriage-enrichment and parent-training classes, which it hopes will draw young couples, he says.
Depending on the results of a feasibility study, it may launch a capital campaign to raise money to build four more facilities to house children this year.
Mr. Brill says he’s still calculating how well people responded to the group’s year-end fundraising letter. In Oklahoma, where Mr. Trump won big, Mr. Brill hopes that people feel confident about their economic futures and are more willing to donate.
Uncertain Outlook
Some charities are concerned that the country’s new president — who often switches his positions or is unspecific on major issues — will continue to be unpredictable on key policy areas like health care, education, and social-service spending.
The big question is: “Will there be uncertainly for four years?” says Mr. Hills of Marts & Lundy. Big policy changes often take months or years to implement, but Mr. Hills says nonprofits shouldn’t hesitate to send appeals now about government proposals that would hurt their organizations. “It’s a good case” for donations, he says.
Others think charities need to consider increasing their lobbying efforts on Capitol Hill — and at the state and local levels — and move beyond fighting solely over potential limits to the charitable tax deduction.
“It’s so important for nonprofits and foundations to get more engaged in public-policy work” said Mr. Delaney of the National Council of Nonprofits. “In particular, look at spending cuts at the state and federal levels and the additional burdens that puts on individual donations to subsidize what government historically has paid for.”
