Nonprofits may have to brace for slower growth in donations this year than initially expected, according to the midyear report by Atlas of Giving, a company that tracks American philanthropy.
The study pegs giving for the first half of 2016 at $241.3 billion, up only 0.9 percent compared to same period last year.
Atlas now forecasts that donations will jump 2.1 percent by year’s end — to $488.3 billion, lower than the 2.6 percent prediction the company made in a January report.
Uncertainty about the economy and the stock market, the possibility of another interest-rate hike by the Federal Reserve, and other factors like the upcoming presidential election and the growing number of high-profile terror attacks have likely slowed down donations so far this year, the report says.
Britain’s exit from the European Union will likely have an impact on the U.S. economy and financial markets, further hampering giving, Atlas says. A stronger U.S. dollar, fear of a recession, and a likely increase in U.S. unemployment could also depress giving, according to the report.
The study advises nonprofits to adjust their budgets downward for 2016 and to hold off on launching capital campaigns until they weigh what Atlas calls “possible negative” outcomes. If money gets tight, charities should consider making cuts in administrative and board activities rather than in development, the report suggests.
Foundation Giving Up
Overall, gifts by individuals were up 0.6 percent in the first six months of 2016 compared to the same period year. Foundation giving and bequests were up 3.3 percent and 0.1 percent, respectively. Corporate donations were down 0.4 percent, according to the report.
Donations to religious causes, which account for nearly one-third of all giving, dropped by 1.1 percent through June, the report says. Donations to environmental causes grew the most over the first six months of 2016, up 3.9 percent — although, at 2 percent of all gifts, such causes receive the smallest portion of overall support, the study says.
Here is how giving fared for all causes:
Type of organization | Percentage increase |
Nature and environment | 3.9% |
Human services and disaster relief | 3.5% |
Arts | 2.1% |
Society benefit | 2.0% |
Education | 1.2% |
International | 0.7% |
Health | 0.4% |
Religion | -1.1% |
Note: Society benefit organizations include advocacy groups, community foundations, Jewish federations, and United Ways.
Source: Atlas of Giving
‘Secret Sauce’
Atlas, which releases giving forecasts in addition to its monthly giving report, says it bases its findings on economic algorithms developed by more than two dozen mathematicians, analysts, and statisticians.
The company has been criticized in the past because its methodologies have not been reviewed by independent researchers, and it refuses to release more detailed information about its methodology. Rob Mitchell, chief executive of Atlas of Giving, has said the company does not want to give away its “secret sauce.”
The company’s giving estimate is much higher than the one reported in June by “Giving USA,” the most-cited annual report on American philanthropy. That study, is produced by Indiana University’s Lilly Family School of Philanthropy for the Giving USA Foundation, pegged giving in 2015 at $373.3 billion, while Atlas reported 2015 donations at $477.6 billion in January.