Atlas Forecasts First Charitable Giving Decline Since Recession
For fundraisers, it always helps to start a new year at full speed.
Instead, donors have moved into 2016 by hitting the brakes.
Our just-released Atlas of Giving forecast predicts a charitable giving decline in 2016. The downturn is already underway, with giving through February down 1.4% compared to the same period in 2015.
These early results were driven in large part by January giving numbers, which recorded the first monthly 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.
With this sluggish start to the year – and gathering headwinds moving forward — we expect giving to charities will total an estimated $468.25 billion in 2016, a 2% annual decline. By comparison, giving increased by 4.6% in 2015.
So what happened?
Why the slowdown?
We believe a range of economic issues in the second half of 2015 and early 2016 are having a chilling effect on donors. Giving is closely tied to stock market performance — and periods of extreme volatility over the last six months had a lag effect on donors, many of whom saw their personal and donor-advised fund balances decline. Add in the fact that the stock market had its worst start to the year in history, and the stage was set for some donor trepidation and pullback.
Meanwhile, the annual forecast for U.S. gross domestic product has been lowered. Charitable giving tends to follow GDP closely, and any further downward trends could further stifle giving. We’ll be watching GDP with increased attention in the coming months — and fundraisers should, as well.
Another risk moving forward is our finding that church giving is declining at a faster rate than the national giving rate. Because religious groups make up the largest charitable giving sector, declines among this group have an outsized impact on overall giving.
And it doesn’t end there. 2016 also features another factor that can dampen charitable giving. The largely unsettled – and at times unsettling — presidential race likely is spawning some donor uncertainty, and also has the potential to re-direct charitable giving dollars to political contributions instead.
The road ahead for fundraisers
Increasingly, it seems clear to us that giving results for early 2016 are not merely a blip on the radar, but rather a harbinger of things to come. In addition to the challenges I just highlighted, a wide range of additional global, political and economic issues could put additional pressures on donors.
The slow start in the first two months of the year and our forecast moving forward should serve as a wake-up call for fundraisers and charitable organizations.
In the current climate, it might make sense to consider delaying the launch of a new capital campaign until conditions improve. You also may want to rethink your approach to regular solicitations, particularly if you identify a specific issue impacting your donor base.
For instance, donors may be more cautious with their giving due to increased fears of a possible recession, or the likelihood of rising interest rates, which could trigger inflation. Also, some challenges may be specific to a region or industry. For example, as I wrote recently, plummeting oil prices have had a devastating impact 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. Also, if you determine a segment of your donor base is dealing with unexpected economic pressures, you can offer up alternatives beyond financial giving to keep them engaged with your organization and the causes that are important to them.
Clearly, we are heading down a rough road in 2016. Being aware – and ahead of – the factors influencing it can strengthen your connections with donors and provide a competitive edge moving forward.
About the Author: Rob Mitchell is the founder and CEO of The Atlas of Giving, the only comprehensive monthly estimate of charitable giving by sector, source, and state in the US. You can connect with him on Linkedin or follow him on Twitter @philanthroman