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Market Volatility, Election Dim Charitable Giving Prospects

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Charitable giving in the U.S. got socked by stock market volatility and economic uncertainty in the first quarter, according to the latest Atlas of Giving report.

Charitable giving through March 31 was unchanged from the same period last year at $119 billion. By comparison, giving in the first quarter of 2015 rose by 8.4% over the previous year’s same period.

The Atlas of Giving estimated that in 2016, charities nationwide were unlikely to achieve the 4.6% increase in giving they recorded in 2015.

Rather, it forecast that nonprofits would likely see total 2016 giving decline by 0.9%, falling from $478 billion in 2015 to $474 billion this year. In a slightly more optimistic scenario, giving might increase by 1.4%, the report said.

Stock market turbulence — along with uncertainty surrounding the November presidential election — has prompted many donors to stay their giving, Atlas of Giving chief executive Rob Mitchell said in a statement. “We’re dealing with some gathering clouds that could escalate into a perfect storm for some charities.

“We have seen extreme stock market swings, and a wild presidential race that is attracting attention and money. Add in other issues such as a lowered GDP forecast and a downturn in church giving, and you end up with an uncertain climate for fundraisers.”

But other research has shown that presidential elections don’t necessarily choke off giving. A recent study by Blackbaud on charitable giving in the 2012 election year found that donors who made federal campaign gifts that year contributed 0.9% more to charities than they did in 2011. At the same time, donors who did not give to political campaigns reduced their charitable contributions by 2.1%.

According to the Atlas report, the turbulence started in January, when giving declined by 0.6% compared with December — snapping a 63-month streak during which giving consistently rose.

February saw a paltry 0.1% increase from January, then March delivered a 3.7% increase that coincided with the stock market’s meteoric rise.

March’s performance gave fundraisers some hope as the stock market performed better than expected, but several conditions warrant close monitoring, the report said.

One is the prospect of tumult at the July nominating conventions. If the political climate becomes stormier than it already is, some potential donors might postpone giving until after the election.

In addition, church giving continues to decline; in the first quarter, it was down 2.1%. Because religious institutions are the largest charitable giving sector, accounting for 32% (followed by education at 17%), declines among this group have an outsize effect on overall giving.

The report recommended that fundraisers proceed with caution in setting fundraising expectations for their organizations, and adjust their appeals to match the mood of their donors.

“Sometimes, simply sharing an awareness of an issue that’s weighing on the mind of a donor will help build trust and open a useful conversation,” Mitchell said.

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