Giving Compass' Take:

• The Lilly Family School of Philanthropy shares insights from a report called Philanthropy Outlook, which includes predictions on how funders might act during a potential recession. 

• How has philanthropy shifted and "stepped up" so far in responding to the recession caused by COVID-19? What more can be done in the next coming months? 

• Checkout this toolkit and guidance for donors during COVID-19. 

In January 2020, early indicators pointed to growth in charitable giving in the United States in 2020. The economy was strong, the stock market was performing well, and unemployment was at record-low levels. While the economy isn’t the only predictor or motivation for charitable giving, research shows that people who feel financially and economically secure tend to donate more, and people with more uncertainty give less.

Projections of charitable giving are included in the Philanthropy Outlook, a report from the Lilly Family School of Philanthropy, presented by Marts & Lundy, that projects giving over the next two years (in this case, 2020 and 2021). In what now seems a prescient decision, the school’s research team included models and findings for what would happen if a recession similar to the Great Recession of 2007-09 took place.

Inclusion of the stress test was intended to help nonprofits think strategically about and plan/prepare for the next recession, whether it came in 2020 or 5-10 years from now. Using characteristics from the Great Recession in the stress test, the model estimated that if a recession of similar magnitude occurred over 2019-2020, giving would be 10.6 percentage points lower in 2020 than the Philanthropy Outlook’s baseline projection.

Without a doubt, nonprofits in the coming days will be asked to do more with less as communities, families, and individuals reel from the loss of jobs and income.

However, philanthropy is stepping up, as it did during the Great Recession. Then, an analysis of the Million Dollar List found that foundations gave more gifts of $1 million or more during the Recession. Whether they gave more after the market rebounded, or they responded to increased societal need, they continued to give. Now, more than 560 foundations have signed a pledge to support and hold themselves accountable to their nonprofit partners.

Read the full article about charitable giving during a crisis by Abby Rolland at Lilly Family School of Philanthropy.