A new study shows that philanthropy is resilient and can withstand short-term economic fluctuations.
The study resulted in a guide, Philanthropy Through Recession: How Savvy Organizations Weather Uncertain Times, released by the Blackbaud Institute. Evaluating data from 11 U.S. recessions, the guide identifies trends and potential implications to help charitable organizations navigate the uncertainty that accompanies occasional economic downturns.
- While the same macroeconomic factors that influence the U.S. economy can also influence the philanthropic sector, giving typically lags behind stock market volatility by about two years, effectively shielding philanthropy against short-term economic fluctuations.
- The three economic indicators with the strongest relationship to charitable giving are wealth, as represented by the S&P 500 Index; income, as assessed through U.S. gross domestic product; and tax policy.
- According to Giving USA, total giving has steadily increased over the last four decades, even when adjusted for inflation. During times of recession, impact is evident, but in the long run, giving continues to rise.
- Adjusted for inflation, giving increased by over $300 billion between 1979 and 2021.
- Total charitable giving has increased or stayed flat in current dollars every year since 1979, except for three years that experienced significant economic declines: 1987, 2008 and 2009.
- Donor advised funds (DAFs) are particularly resilient in times of economic shock, as DAFs build assets over time, giving donors a ready stash of cash available to give when conditions require extra support.
The guide offers a wide array of historical research against the backdrop of long-term trends, leveraging data from the annual Giving USA Report. In addition, the guide includes seven steps that organizations can take today to future-proof their operations, tips for nonprofit finance teams and overall trends to watch.