Charities can expect overall giving to grow by 4.8 percent this year and by 5.1 percent in 2021, according to projections released Monday.
Giving by bequests is expected to show the strongest growth, followed by giving from foundations, and then giving by individuals.
That kind of overall growth would far outpace the average increase in giving of 2 percent over the past 10 years and 2.7 percent over the past 40 years, according to the researchers’ analysis of “Giving USA” data.
The annual “Philanthropy Outlook” was produced by the Lilly Family School of Philanthropy at Indiana University and presented by fundraising consulting company Marts & Lundy. The report takes into account a broad range of economic indicators including the stock market, job growth, wage growth, gross domestic product, and federal tax law. Researchers incorporated 34 different variables into their models.
The report is intended to help fundraisers and nonprofit leaders plan for the future. However, the performance of the stock market could make such planning a lot more difficult. On the day the optimistic report was released, the market took its steepest daily decline in two years as outbreaks of the deadly coronavirus continue to spread and roil the global economy.
“Risk is a part of the environment that we’re in,” said Una Osili, associate dean for research and international programs at the Lilly Family School, who oversaw the creation of the report.
“The overall projections are based on what the economy has been doing and is projected to do,” says Phil Hills, president of Marts & Lundy. “That doesn’t figure in new disrupters that may happen, like coronavirus popping up. There always are things that might be bumpy along the way.”
Nobody knows whether that will have short-term or longer-term implications, Hills says. But the good news is that donors have adapted in other ways.
“Some of the major disrupters over the past couple of years, especially the changes in the tax code, are now starting to smooth out in the psyche of individuals about giving,” Hills says. “That smoothing makes things a little bit easier over all.”
‘Stress Test’
This year’s report includes a “stress test,” modeling how charitable giving could change in the event of a downturn the size of the Great Recession in any year. Under conditions similar to the Great Recession, giving could be 10.6 percent lower than projected.
Many nonprofits weren’t prepared for the most recent recession and were forced to cut programs to deal with the crisis, Osili said. Fundraisers should continue their outreach to donors no matter the economic climate.
“Engagement really matters in both favorable economic conditions and, also, in moments when there is more uncertainty,” she said. “The level of support may change or the type of support that an organization gets may be different, but there is still an opportunity to engage donors and funders even in more uncertain economic times,” she said.
Charities should also remain focused on their core mission, Hills said.
“If you’re worried about disruption, it’s best to stay in your focused sector, rather than doing things that might be a little more risky.”
Weak Corporate Giving Projected
Individual giving, which represents more than two-thirds of total giving, is projected to grow by 4.4 percent in 2020 and 4.7 percent in 2021.
Giving by corporations is expected to be more tepid, with projected 0.4 percent growth in 2020 and 1.4 percent growth in 2021.
Some corporate sectors are doing better than others. Even before the anxiety around the coronavirus, large companies concerned about global trade have seen slower long-term growth. Fundraisers reliant on such groups should think about how to diversify their portfolio, Osili says, and ask companies to help in other ways besides cash gifts, such as providing in-kind support, marketing partnerships, or volunteering time.
Health Outlook
The outlook report also includes projections for growth in giving to education, health, and public-society benefit nonprofits.
Health nonprofits are projected to see the strongest growth in giving — 7.9 percent in 2020 and 7.3 percent in 2021. Researchers base that projection on factors including the average growth in consumer spending on health care services.
Education and public-society benefit nonprofits are both projected to see growth of around 5 percent over the next two years.
