Charitable giving will grow more than 3.5 percent in 2017 and 2018, study predicts
Charitable giving in the U.S. is predicted to grow by 3.6 percent in 2017 and by an additional 3.8 percent in 2018, according to The Philanthropy Outlook 2017 & 2018, 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.
“Continued growth in the overall economy will lead to a rise in philanthropic giving this year and next,” said Amir Pasic, Ph.D., the Eugene R. Tempel Dean of the school. “Our research indicates that all types of donors—individuals, foundations, corporations and estates—are likely to increase their giving in each of the next two years. Nonprofit organizations and the people they serve can find encouragement in the anticipated expansion of giving.”
The Philanthropy Outlook generates predictions for year-to-year growth rates in overall giving; giving by type of donor; and giving to education, health, and public-society benefit nonprofit organizations. Projected rates of change in the new Outlook use 2016 as the base year and are reported in 2015 inflation-adjusted dollars.
Explanations of the economic factors and conditions that are likely to influence the predicted changes, implications of the results, and suggestions for nonprofit professionals and fundraisers in light of the anticipated giving climate are provided in the report.
Changes in total giving for the years 2017 and 2018 are predicted to exceed the most recent 10-year annualized average increase in giving of 0.5 percent, but will be below the most recent 25-year and 40-year annualized averages. In general, increases in the U.S. economy, as reflected in the value of stocks, Gross Domestic Product (GDP), and household income, will lead to a rise in philanthropic giving in 2017 and 2018.
“The projections of The Philanthropy Outlook point to some dramatic changes in American philanthropy. Contributions to donor-advised funds and to family foundations continue to grow significantly, leaving enormous amounts of charitable dollars waiting for future distribution. These donors are seeking meaningful relationships with organizations and the kinds of inspirational ideas that will fulfill their philanthropic aspirations. While the outlook is certainly good, the need for vigorous and meaningful engagement on the part of recipient organizations has never been greater,” said John M. Cash, Ph.D., chair of the board of directors of Marts & Lundy.
Projected growth by type of donor
- Growth in giving by foundations will lead the way in both years (5.9 percent in 2017 and and 6.0 percent in 2018).
- Estate giving is expected to increase by 5.4 percent this year and 5.2 percent next year.
- Giving by individuals is predicted to grow 3.0 percent and 3.2 percent respectively.
- Giving by corporations will lag behind the other sources of giving, rising by just 2.4 percent and 2.7 percent respectively.
“As we consider the outlook for 2017 and 2018, it’s important to note that individuals continue to play a leading role in driving both giving trends and growth in giving,” said Una Osili, Ph.D., director of research for the Lilly Family School of Philanthropy. “Individual donors are responsible for the majority of charitable giving, as well as the increase in foundations, donor advised funds and other innovations in giving.”
Giving to health is predicted to grow by 8.5 percent in 2017 and 7.9 percent in 2018, exceeding historical annualized averages over the most recent 40-year period. Anticipated increases across various consumer spending categories and an overall positive increase in the U.S. economy will influence the rise in giving to health.
Giving to education is projected to rise 6.3 percent in 2017 and 6.0 percent in 2018, continuing the strong growth trends realized in recent years. Giving to education includes giving to support education at all levels, including higher education; libraries; educational research; educational support services; and many similar types of organizations. Multi-million-dollar gifts and billion-dollar campaigns across public and private universities have positively influenced growth in this subsector in recent years.
"The increase in philanthropic support across the entire sector provides organizations with the opportunity to increase services in a time of expanding need. For education and health, which will see the highest growth, access and innovation will likely be significant issues to address. Student debt, rising costs of patient care and the need to continue funding for life-changing research will continue to be focal points for giving," said Phil Hills, president and chief executive officer of Marts & Lundy.
Giving to support the public-society benefit subsector will also be strong, with growth of 5.2 percent and 5.4 percent, respectively. Giving to public-society benefit includes giving to federated campaigns, United Ways, human and civil rights organizations, national donor-advised funds, and other similar types of organizations. Growth in contributions to donor-advised funds will likely help this subsector realize sustained increases.
The report’s research team employed an econometric methodology to develop the projections for The Philanthropy Outlook 2017 & 2018. This type of methodology tests statistical relationships between variables. The researchers tested tens of thousands of combinations of economic variables that had the potential for influencing each type of giving, ultimately identifying 25 key predictors of giving. More information about the methodology is available in the full report. The Outlook stresses that certain conditions, such as changes in tax policy or other public policy as a result of the recent presidential and congressional elections or significant changes in the global or U.S. economy could affect the predictions for giving.
View the full report
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 @IUPhilanthropy or “Like” us on Facebook.
About Marts & Lundy
Marts & Lundy is the one of the world’s most innovative and successful international fundraising consulting firms. With nearly 50 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. Visit our website. Follow us on Twitter@MrtsAndLndy and on LinkedIn and Facebook.