Charitable Giving Will Be Down in 2016 as Economic Uncertainties Mount
The Atlas of Giving projects annual charitable giving in the U.S. will decline by 2% in 2016 as donors react to market volatility, election-year and unstable economy. In January, the Atlas tracked the first monthly decline in giving since the end of the Recession.
Dallas, TX USA, April 13, 2016 (Newswire.com) - 2016 is off to a rocky start for many U.S. charities, with giving declining 1.4% through February and the downward trend expected to continue for the full year.
The just-released Atlas of Giving analysis found that year-to-date charitable giving at U.S. charities is down through the first two months of the year as a range of economic factors had a chilling effect on donors.
"Giving is closely tied to stock market performance, and periods of extreme volatility over the last six months are having a lag effect on donors who have seen balances in personal and donor-advised portfolios decline."
Rob Mitchell, CEO, Atlas of Giving
The slowdown prompted the Atlas to downgrade its full-year forecast to $468.25 billion, which represents an annual decline of 2.0% — the first such decline since the most recent recession. By comparison, giving increased by 4.6% in 2015.
The disappointing year-to-date results were driven in large part by January giving numbers, which recorded the first month-over-month decline since the nation’s deep recession ended in June 2009. January’s decrease of 0.6% from December snapped a 63-month streak during which giving consistently rose on a monthly basis as the country experienced economic recovery. February giving was also sluggish, up only 0.1% from January.
Rob Mitchell, CEO of the Atlas of Giving identified a range of factors contributing to the slowdown. Among the key drivers:
· The annual forecast for U.S. gross domestic product has been lowered, and charitable giving tends to closely follow GDP.
· Church giving is declining at a faster rate than the national giving rate – down 2.3% year-over-year. Because religious institutions are the largest charitable giving sector, declines among this group have an outsized impact on overall giving.
· Some charitable dollars are being re-directed to political campaigns during this high-profile Presidential election year.
· Stock market volatility in recent months has some donors uneasy about the economy and their personal financial situations.
“Giving is closely tied to stock market performance, and periods of extreme volatility over the last six months are having a lag effect on donors who have seen balances in personal and donor-advised portfolios decline,” said Mitchell. “When you add in lowered GDP and a largely unsettled presidential race – which can create donor uncertainty and has the potential to siphon off charitable dollars -- it was inevitable we would see a negative ripple effect on giving.”
The slow start to the year and adjusted annual forecast serve as a wake-up call to fundraisers and nonprofits, which should adjust their expectations and approach to match the mood of their donors, Mitchell said.
Donors may be more cautious with their giving due to increased fears of a possible recession or the likelihood of rising interest rates could trigger inflation. Also, some of the challenges may be specific to a region or industry. For example, plummeting oil prices have had a devastating impact recently on the oil and gas industry and the communities that rely on that industry for economic prosperity and growth.
“Sometimes, simply sharing an awareness of an issue that’s weighing on the mind of a donor will help build trust and may open a useful conversation,” Mitchell said. “So, for instance, a fundraiser paying attention to trends in oil prices can adjust strategies and outreach for different populations within their donor base accordingly. That might mean offering donors who are feeling the pinch from the oil downturn some alternative and creative ways they can continue supporting causes that are important to them.”
Interested in additional insights from Rob Mitchell? We would be happy to set up an interview or provide additional information. Please contact Peter Panepento at Peter.panepento@gmail.com or 202.531.3886.
About The Atlas of Giving The Atlas of Giving is an economic intelligence tool created to measure and reliably forecast charitable giving in the United States. The Atlas of Giving was originally engineered by Philanthromax, LLC in 2010. Data from the Atlas of Giving is gathered from a series of proprietary algorithms using multiple economic and demographic variables. The algorithms match published giving data for the last 42 years with a 99.5% coefficient of correlation. The Atlas of Giving accounts for the entire giving economy and is the most precise and timely measurement of total charitable giving in the United States, as well as the only giving forecast. For more information, visit www.atlasofgiving.com
Source: Atlas of Giving