Americans’ charitable giving will increase by 3.6% this year and by 3.8% in 2018, according to a report released Thursday by Indiana University’s Lilly Family School of Philanthropy and Marts & Lundy, a consultancy.
The report predicts that changes in total giving for the years 2017 and 2018 will exceed the most recent 10-year annualized average increase in giving of 0.5%, but will fall short of the most recent 25-year and 40-year annualized averages.
In general, it said, increases in the U.S. economy, as reflected in the value of stocks, GDP and household income, will lead to the near-term rise in philanthropic giving.
“The projections of The Philanthropy Outlook point to some dramatic changes in American philanthropy,” John Cash, chair of the Marts & Lundy board of directors, said in a statement. “Contributions to donor-advised funds and to family foundations continue to grow significantly, leaving enormous amounts of charitable dollars waiting for future distribution.”
Cash said these donors were looking for meaningful relationships with nonprofits and the kinds of inspirational ideas that would 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,” he said.
Projected Growth by Source
Giving by foundations will lead increases in both 2017, 5.9%, and 2018, 6%. Average to above-average growth in preceding years’ S&P 500 and GDP will most significantly influence the increases, the report said.
Estate giving is expected to increase by 5.4% this year and 5.2% next year, with close-to-average growth in household and nonprofit net worth in preceding years and growth in the S&P 500 being the chief contributing factors.
Individuals and households will raise their giving levels by 3% this year and by 3.2% in 2018, owing mainly to these factors:
- Average to above-average growth in personal income
- Close-to-average growth in household and nonprofit net worth
- An increase in the number of households that itemize deductions on their taxes
Corporate giving will lag behind the other philanthropic sources, rising by just 2.4% and 2.7% this year and next. The majority of this increase will be influenced by average growth in GDP and above-average growth in corporate saving.
“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,” the Lilly School’s director of research Una Osili said in the statement.
“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.”
To develop these predictions, researchers tested 25 economic variables they identified with potential for influencing each type of giving.
Giving by Sector
The report predicts that giving to health will grow by 8.5% in 2017 and 7.9% 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 will continue the strong growth trends seen in recent years, rising by 6.3% in 2017 and 6% in 2018. Giving to this sector supports education at all levels, including higher education, libraries, educational research, educational support services and many similar types of organizations.
Multimillion-dollar gifts and billion-dollar campaigns across public and private universities have positively influenced growth in this subsector in recent years, the report said.
“The increase in philanthropic support across the entire sector provides organizations with the opportunity to increase services in a time of expanding need,” said Phil Hills, president and chief executive of Marts & Lundy.
“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.”
Giving to support public-society benefit will also be strong, according to the report, with growth of 5.2% and 5.4% this year and next. Giving to public-society benefit goes to federated campaigns, United Ways, human and civil rights organizations, national DAFs and other similar types of organizations.
Growth in contributions to DAFs will likely help public-society benefit realize sustained increases, the report said.
— Check out 4 Tax-Planning Tips for a Fiscally Healthy 2017 on ThinkAdvisor.