By Barlow Mann
A look at what Giving USA 2016: The Annual Report on Philanthropy for the Year 2015 means for nonprofits.
According to the recently released Giving USA 2016: The Annual Report on Philanthropy for the Year 2015, estimated charitable contributions reached a new high of $373 billion. The Annual Report on Philanthropy reports charitable gifts from individuals, estates, foundations and corporations. Whether measured in current or inflation-adjusted dollars, the latest totals represent a new record when compared to the revised inflation-adjusted estimate of $359 billion in giving for 2014.
After peaking in 2007, charitable giving experienced a steep two-year decline in 2008 and 2009 during the Great Recession before an upsurge in giving began in 2010. By 2014, overall giving had finally rebounded to pre-recession levels in nominal terms. Last year was the first year that giving in terms of inflation-adjusted dollars had fully recovered. The recovery in giving appears solid with overall inflation-adjusted giving increasing from all four sources: bequests up 1.9 percent, individuals up 3.7 percent, corporations up 3.8 percent and foundations up 6.3 percent.
It should be noted, however, that individual giving when adjusted for inflation is still 1 percent below the previous peak reached in 2005.
Corporations and foundations experienced the highest rates of growth as their philanthropy is more closely tied to stock prices and corporate earnings, while individual giving is more tied to trends in disposable income. Bequest growth normally lags other giving since it reflects investment, real estate and other values from one to three years prior, when bequest donors actually passed away and assets were in many cases liquidated at values that had not yet fully recovered.
We predicted in the December 2015 Give & Take that expanding consumer spending would increase economic activity and low unemployment would propel total giving to record levels in the range of 2.0 percent of GDP. The Giving USA estimates affirm this prediction, placing total giving at 2.1 percent of GDP. Additionally, while contributions to foundations experienced a decrease in 2015, giving increased for all other charitable categories (religion, education, human services, health, public-society benefit, arts/culture/humanities, international and environment and animals).
Very large charitable contributions continue to play an outsized role. A very small number of charitable contributions of $100 million or more accounted for $3.3 billion, nearly 1 percent, of giving. Nonetheless, more than 99 percent of total giving comes in both large and small contributions below this level and many six- and seven-figure bequests come from individuals who would never be a prospect for a large lifetime gift.
It appears that 2016 will be another exciting year for philanthropy with many of the same issues affecting philanthropy as in the past several years, plus the most unusual political scene in recent memory. The environment for charitable giving remains good. Barring a severe economic downturn, 2016 will likely see another increase in overall giving. ■
Barlow Mann is Chief Operating Officer for Sharpe Group.