U.S. Charitable Giving Projected to Grow Four Percent in 2016, 2017
New research developed by the Indiana University Lilly Family School of Philanthropy and presented by Marts & Lundy finds that charitable giving in the U.S. will by 4.1 percent in 2016 and 4.3 percent in 2017.
The Philanthropy Outlook 2016 & 2017 projects that the changes in total giving for each of those years will exceed the 5-year, 10-year and 25-year annualized average rates of growth in total giving, and will be just slightly below the 40-year average growth rate of 4.4 percent.
“In light of the recent volatility of the U.S. economic environment, this is a positive sign for philanthropy,” said Amir Pasic, Ph.D., Eugene R. Tempel Dean of the school. “The prospects are good for solid growth in overall giving to nonprofits both this year and next.”
Increased Giving by Foundations
Giving by all source types is expected to rise in 2016 and 2017.
In each of the two years, growth in giving by foundations will be the largest, followed by growth in giving by estates and corporations. Individuals/households will give more in 2016 and 2017, as compared with prior one-year periods, but will comparatively be a bit more modest than the growth from the other sources, reflecting the unevenness of economic trends that shape households’ giving.
“The Philanthropy Outlook 2016 and 2017 has much good news for the nonprofit sector, and especially for education. The involvement of a new generation of philanthropists is now bearing fruit and institutions, particularly educational institutions that can inspire and engage donors in their future, have unique opportunities,” said John M. Cash, Ph.D., chair of the board of directors of Marts & Lundy. “The substantial projected increase in foundation giving, driven by new wealth in family-directed foundations, indicates that the importance of individual donors, particularly at higher giving levels, continues to increase. As the disparity between the very wealthy and the rest of our society grows, the new report demonstrates that nonprofits should focus their attention on all levels of giving and should pay special attention to the potential for securing leadership commitments from top-level donors.”
Education Expected to See Strongest Growth
Giving to education is expected to grow by 6.3 percent this year and by an additional 6.1 percent next year, according to The Philanthropy Outlook 2016 & 2017. Historically, giving to education at all levels has represented about one-sixth of all U.S. giving.
“We project stronger growth in giving to education in 2016 and 2017 than in overall giving or in any of the sources of giving,” said Una Osili, Ph.D., director of research for the school. “This may be due in part to the increasing interest of donors, and especially wealthy donors, foundations and even corporations, in funding higher education, as well as a growing role for philanthropy in K-12 education.”
Factors Affecting Giving
According to the report, economic factors that are expected to have the most significant, positive impact on U.S. charitable giving in 2016 and 2017 include: projected growth in the S&P 500 Index, personal income, and the net worth of households and nonprofits, 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 report’s research team employed an econometric methodology to develop the projections for The Philanthropy Outlook 2016 & 2017. 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 type of giving, ultimately identifying 20 key predictors of giving.
More information about the methodology is available in the full report at PhilanthropyOutlook.com.