Will the Election and Economy Hurt Philanthropy in 2024?
Nonprofit executives should be in a constant state of planning, critiquing, evaluating and adjusting to internal and external forces that affect their programs. Like weather forecasters, variable and changing internal and external forces could affect short- and long-term results. Initiative-taking and successful nonprofit executives should always be ready to adjust strategies and methodologies.
While we have just landed in 2024, we are all genuinely concerned if the economy and general election in November will have any effect on nonprofit philanthropy this year. Projecting results is not easy, especially with changing and shifting landscapes.
What we do know is that, in 2022, individual donors fell to its lowest share of overall giving in the past 40 years at 64%, according to Giving USA. Also, the number of donors that gave on Giving Tuesday was down 10 percent last year over 2022 totals. Many organizations are ramping up their retention strategies in an attempt to stem the tide of donor reductions. Thus, going into 2024, philanthropy is already under ongoing stress.
The Economy in 2024
Chief economists from the World Economic Forum noted that the global economy is expected to remain uncertain throughout 2024. Financial conditions are expected to remain tight, with geopolitical tensions growing and leading to volatility. However, inflation is expected to lessen while labor markets and financial conditions will loosen this year.
On the bright side, in December 2023, the Federal Reserve projected GDP to reach 1.4% by the end of 2024 and unemployment rates to remain around 3.8%. The Fed also hinted that three interest rate cuts may happen in 2024, which is good news to fundraisers. Lower interest rates mean a stronger stock market, which helps to promote positive philanthropic giving.
The Election Effect in 2024
CCS Fundraising notes that presidential elections have a negligible effect on overall charitable giving trends. Charitable giving increased in eight of the past nine presidential election years, per Giving USA data. The exception was in 2008 during the financial crisis. Donors in the majority of election years appear to give to both charity and campaigns, and there is little empirical evidence to support a giving effect of an election year. Nonprofits in 2024 should reaffirm their organizational mission, purpose and values.
Through an analysis of Mastercard payments, the Mastercard Center for Inclusive Growth found that charitable donations outpaced donations to political organizations for almost every month from January 2004 through December 2016, according to CCS Fundraising. Political giving spiked toward the end of each presidential election — exceeding charitable contributions in 2012 and 2016 — but then resettled following the conclusion of the election.
Preparation in Anticipation
To increase your giving levels in changing economic times and in preparation for unknown election year circumstances, prioritize donor relationship-building to see largest gains in 2024 giving. The Winkler Group suggests Identifying and qualifying prospective donors through wealth screening, peer review, assessment of past giving and predictive donor modeling. By creating an engagement, cultivation and solicitation strategy for your donor prospects, your organization can expect consistent results.
In addition, give retention programs your top attention. Make every attempt to retain donors and acquire new donors. Your base of support must be maintained and expanded.
Indicators seem to convey that the election year will not have a major effect on philanthropy. The economy, however, could be a different story. If the economy leans in the direction that provides a strong stock market and positive economic metrics, donors will want to give and give more than anticipated. If economic indicators show negatively, the opposite effect could occur with less philanthropy.
So, create a solid philanthropic plan for time, talent and treasure for this year. Stay on top of your plan weekly. You will be in a better position to adjust to changing 2024 trends, especially if you have to deal with a mixed bag of indicators. If donors feel good about the economy and political stability, many will give and increase their giving accordingly. Conversely, if prospects and donors are in a perceived state of uncertainty, they may reduce their generosity. You must prepare for both realities.
The preceding post was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.
Related story: The Effect of Inflation on Charitable Giving
Duke Haddad, Ed.D., CFRE, is currently associate director of development, director of capital campaigns and director of corporate development for The Salvation Army Indiana Division in Indianapolis. He also serves as president of Duke Haddad and Associates LLC and is a freelance instructor for Nonprofit Web Advisor.
He has been a contributing author to NonProfit PRO since 2008.
He received his doctorate degree from West Virginia University with an emphasis on education administration plus a dissertation on donor characteristics. He received a master’s degree from Marshall University with an emphasis on public administration plus a thesis on annual fund analysis. He secured a bachelor’s degree (cum laude) with an emphasis on marketing/management. He has done post graduate work at the University of Louisville.
Duke has received the Fundraising Executive of the Year Award, from the Association of Fundraising Professionals Indiana Chapter. He also was given the Outstanding West Virginian Award, Kentucky Colonel Award and Sagamore of the Wabash Award from the governors of West Virginia, Kentucky and Indiana, respectively, for his many career contributions in the field of philanthropy. He has maintained a Certified Fund Raising Executive (CFRE) designation for three decades.