The Good and Bad News about Giving in the USA

Article originally appeared on The HuffPost; Steve MacLaughlin

Giving USA is the longest-running report of charitable giving in the United States and has been an important tool for nonprofit professionals to understand what is happening across the sector. The latest Giving USA report sheds light on philanthropy trends in the US from 2016. There is a mix of good and bad news in the report that is worth examining further.

THE GOOD NEWS

First, let’s review some of the good news from Giving USA. The report estimates that total charitable giving in the United States was $390.05 billion. That was an inflation adjusted increase of 1.4% compared to 2015 and this increase aligns with Blackbaud’s Charitable Giving Report estimate of a 1% increase in giving.

Giving by individuals represented 72% of all charitable giving and increased roughly 2.6% compared to 2015. The report also notes that giving by corporations grew 2.3% and foundation giving increased 2.2%, when both are adjusted for inflation.

Giving USA also estimates giving across nine different categories of recipient organizations. For just the sixth time in the last 40 years, every single sub-sector had an increase in year-over-year giving. Environment and Animal Welfare organizations led the way with a 5.8% increase in charitable giving.

THE BAD NEWS

There is also some bad news for fundraising addressed in the latest Giving USA findings. For starters, while giving by individuals, foundations, and corporations increased, there was a significant decline in bequests. In 2016, there was a 10.1% drop in estate giving following many years of very large growth trends. In prior years, significant increases in bequests helped to boost overall giving.

While nonprofit organizations across nine categories each experienced positive growth in 2016, the overall growth trend was an anemic 1.4%. Religious organizations represent 32% of all giving, the largest of any sub-sector, but their giving only grew by 1.8%. Giving to Educational institutions only grew by 2.3% compared to two consecutive years of more than 8% growth. What does this trend mean for the billion dollar capital campaigns and education’s philanthropic arms race we’ve witnessed in the past few years?

Yes, there are more encouraging growth trends happening with environment and animal welfare, arts and culture, and international affairs nonprofits. But keep in mind that more money is given to education than all three of those sub-sectors combined. Nearly 77% of all charitable giving goes to religious, education, human services, foundations, and health organizations in the United States. That means all other groups are raising money from a smaller portion of the available fundraising pie.

Let’s forgo a discussion about the relationship between giving and gross domestic product. (It was 2.1% in 2016 — largely unchanged for decades now.) The more troubling statistic buried in the appendices of the Giving USA report is that individual giving as a percentage of disposable personal income has also been stuck at 2% for 40 years. When the mega gifts are set aside, a tremendous amount of giving is directly tied to disposable income.

The other curious finding by Giving USA was that individual-to-individual giving dropped 3.7% in 2016. The current “crowdfunding” craze currently captivating constituents commonly takes the form of individual-to-individual giving. Has the bubble burst on crowdfunding? Probably not and it is worth mentioning that crowdfunding isn’t new. There are examples of crowdfunding campaigns from 1914, long before the Internet was invented.

THE ROAD AHEAD

The state of fundraising has more questions than answers at the moment. Why is the growth rate in giving slowing despite a strong domestic economy and low unemployment rates? Does the increase in size and influence of donor advised funds help or harm the nonprofit sector? What happened to the promises of a giant generational wealth transfer that was predicted over a decade ago? What do proposed changes in government funding and policies mean for nonprofit organizations over the next year? What role does the massive student debt problem having on Millennials and their charitable giving? Will funding shift to social good organizations that do not rely on having a 501c3 tax status? We may not like the answers to some of these questions.

The data tells us that over the past decade there has been an overall decline in donors — both new and existing. We know that poor donor retention rates are a leading indicator of overall giving declines. Social media is not a savior and donor stewardship cannot be substituted. Outcomes need to be emphasized more by nonprofits than just outputs.

But we also know that some nonprofits are taking more risks, engaging supporters in new ways, and using more science to aid the art of fundraising. Not all nonprofits performance is a regression to the mean. The bright spots in the nonprofit sector are likely to teach us more than what’s not working. The future of fundraising will require risk, innovation, and a drive to move beyond the status quo.