A recent conference call with dozens of nonprofit officials featured good news about giving and this rousing assessment from analyst Carol Rhine: “We can expect that this year’s going to be gangbusters.”
Ms. Rhine, who’s with Target Analytics, a division of Blackbaud, isn’t the only one expecting strong growth in charitable giving in 2017. A booming stock market, several high-profile natural disasters, and opposition to President Trump and his agenda are all thought to be spurring contributions. Surveys of donors and nonprofits are also pointing to a good year.
“I’m kind of bullish that we don’t have the huge distraction that we had at the end of last year” in the election, says Rick Dunham, a fundraising consultant in Plano, Tex., who focuses on faith-based organizations. “The trends I’m seeing are actually pretty encouraging. If they hold up, we could have a really strong year end.”
Nonprofits report they’re seeing particularly encouraging news from what’s been a flagging segment of donations: small gifts. Target Analytics tracks the direct-mail and marketing performance of about 70 nonprofits, including large national nonprofits such as Habitat for Humanity International, Mercy Corps, and the Natural Resources Defense Council. Revenue for that group of charities was up a median 8.3 percent for the first half of the year over the same period in 2016. The number of donors, meanwhile, grew a median 4 percent in the second quarter.
That’s significant; before 2017, the group had not seen growth in the number of donors since 2005, when major hurricanes, including Katrina, battered the Gulf Coast.
The impact of this year’s raft of hurricanes and wildfires and the Las Vegas mass shooting are not yet reflected in the data, so those events could provide an additional boost.
Lt. Col. Ron Busroe, spokesman for the Salvation Army, worries that the hurricanes may not increase giving to his organization. Instead, donors may reallocate their gifts to hurricane relief at the expense of the group’s local chapters. “That has happened to us in years past, particularly when storms come later in the season,” he says. “So that’s a bit of a concern. It doesn’t mean that we’ll raise less money, but it does mean that that money will be designated more for the disaster as opposed to the local Salvation Army needs in the community.”
Big Donors Lining Up
Major donors are also signaling they plan to be more active this year. In a survey of more than 13,000 charity supporters, nearly a third of big donors said they planned to give more in 2017 than they did last year. That’s the most “optimistic” finding for major gifts since the survey was started in 2009, says Penelope Burk, president of Cygnus Applied Research, the fundraising-consulting firm that conducts the work.
Meanwhile, a Chronicle of Philanthropy survey of 176 large nonprofits suggests there’s robust confidence about 2017. Nearly a third of the groups surveyed said they expected giving would increase 5 percent or more this year. Only 13 percent forecast that giving would decline.
The 55 groups expecting gains of 5 percent or better include Feeding America, Boys & Girls Clubs of America, Doctors Without Borders, Ducks Unlimited, Fellowship of Christian Athletes, the New York public broadcaster WNET, and the National Audubon Society.
Organizations that sponsor donor-advised funds are particularly confident about 2017. Among the 12 groups in the Chronicle survey that rely exclusively on the funds, only one reported that it expects a decline in giving. Already, Schwab Charitable Fund saw 40 percent growth in contributions from January through August over the same period last year.
Stock-Market Surge
At the year’s start, the Marts & Lundy consulting firm forecast that giving would increase 3.6 percent in 2017, up from 2016’s 1.4 percent growth recorded by the “Giving USA” report. Phil Hills, president of Marts and Lundy, now calls the estimate “a little aggressive” but says, “We’ll probably make it.”
The Marts and Lundy forecast, which is based on research by Indiana University’s Lilly Family School of Philanthropy, pointed to three indicators for giving: growth in the S&P 500 stock-market index, in the country’s gross domestic product, and in personal income.
The stock market has surged beyond expectations, with the S&P topping 14 percent growth in the year’s first three quarters. GDP grew 3.1 percent in the year’s second quarter — the best performance since early 2015 — with third-quarter numbers still to be released. Personal income has nudged up slightly.
Nonprofits report they’re seeing particularly encouraging news from what’s been a flagging segment of donations: small gifts.
Another factor in the strong giving by big donors this year may be a 2008 tax rule requiring that the fees hedge-fund managers earned overseas in recent years must be repatriated by the end of 2017, making that income subject to U.S. taxation. As a result, hedge-fund managers with an interest in philanthropy have a big incentive to make charitable gifts before January 1 to reduce their tax liability. One example may be financier George Soros’s recent shift of $18 billion into his philanthropic enterprises, which include two U.S. foundations.
Year-End Fundraising
If Congress and President Trump approve a major tax cut, that could further spur wealthy donors to give before the end of the year, because their tax deductions would be less valuable after the cuts are implemented. Many nonprofits — particularly donor-advised funds — saw a spike in giving at the end of 2016 as Mr. Trump talked about tax reform as a major part of his agenda.
Still, political turmoil is clouding predictions of how fundraising will finish out the year. “When there’s a tax discussion, that’s always going to cause uncertainty,” says Mr. Hill. “And it’s harder to predict what will happen this time than it’s been in the past. And uncertainty usually means that donors hold back.”
Thomas Lockerby, who oversees fundraising for the Phillips Academy in Andover, Mass., also worries about instability in today’s volatile political environment. The private school, which recently launched a $400 million campaign, is “confident but tempered,” he says. The economy appears strong, he notes, “but we live in a world where a major global event can really affect sentiment in a way that could make things a bit more challenging.” He cited tensions with North Korea as an example.
But Peter Fissinger, president of Campbell & Company, a fundraising consulting firm, says he’s confident that human-service giving will be up this year. “Historically, in years when there’s a perception of very significant human need, as in natural disasters or tragedies like Las Vegas, that giving spikes.”
