Despite some negative market and economic conditions, charitable giving will increase during the next two years, according to a report released Wednesday.
Charitable giving will go up by 3.4 percent in 2019 and by 4.1 percent in 2020, according to "The Philanthropy Outlook 2019 & 2020" by the Indiana University Lilly Family School of Philanthropy and Marts and Lundy, a management consulting firm.
The increases are not as large as those in recent years and could be impacted further by economic changes, including the length of the government shutdown, said Una Osili, an economist and associate dean for research and international programs at the Lilly Family School of Philanthropy.
The stock market, wages, job growth and the housing market are all still trending favorably, which makes the philanthropic picture look good, said Osili, but the school also set out various scenarios in case the economy takes a downturn.
“It is encouraging to see that total giving is projected to grow in 2019 and 2020, even in the wake of recent changes from the Tax Cuts and Jobs Act,” Phillippe G. Hills, president and CEO of Marts & Lundy, said in a statement. “However, it is still too soon to determine exactly how the recent tax changes may impact future donor decisions, and nonprofits need to be mindful of its potential impact.”
The study predicts that giving by individuals will grow by 2.1 percent in 2019 and 3.4 percent in 2020, trailing the rate of growth for total giving. At the same time, the giving rate for foundations and estates is expected to remain strong. Foundations will increase giving by 7 percent in 2019 and 6.1 percent in 2020, and giving by estates will go up 5.4 percent in 2019 and 5.6 percent in 2020.
Giving by corporations is projected to grow 3.2 percent in 2019 and by 2.6 percent in 2020, the study said.
Education and health are expected to see the strongest growth.
“To understand the full scope of the dynamic giving environment expected in 2019 and 2020, the macro-economic climate and ongoing donor responses to the 2017 federal tax law changes must be taken into account,” the report said,. “While the ways in which the confluence of these factors will play out for American philanthropy cannot be fully known at this time, ‘'The Philanthropy Outlook' draws on recent economic forecasts and analyses of the law’s anticipated effects to present projected growth.”
“One other challenge we face is we do not know the length of the government shutdown,” said Osili.
“We want to express caution” due to the possible different scenarios that could play out for a growing economy, flat growth or an economic downturn, Osili said. “But the stock market is still largely positive and the labor market, wages and the housing market are performing reasonably well,” which bodes well for charitable giving.