How’s the Economic Outlook for Year-End Charitable Giving? Signs Point to Growth

As we approach year-end, the economic outlook for charitable giving looks promising, with year-over-year increases likely for most sectors. Insights from the Q4 Giving Sciences Barometer paint an encouraging picture of improving donor sentiment and economic conditions.

Key Insights

1. Improved Economic Sentiment
   The percentage of charitable donors who believe the U.S. is heading into a recession dropped significantly this quarter. In the months leading up to the presidential election, 56% of donors held this view. By the end of November, this number had fallen to 49%—a significant seven-percentage-point decrease.
2. Stabilizing Inflation Impact
   The proportion of donors reporting they’ve given less in the past 12 months due to inflation remains unchanged at 58%. This stability is a welcome change from the continual increases of the past few years. While inflation is above the Federal Reserve’s 2% target, and price levels remain elevated, the current rate of 2.7% is more manageable compared to recent years.
3. Rising Consumer Confidence & Markets
   Consumer confidence is climbing, though it still lags pre-pandemic levels considerably. The stock market—with a sizeable correlation to philanthropy—continues to hit new all-time highs. The Federal Reserve just announced a third interest rate cut this year, bringing interest rates down by a full percentage point since September, though it signaled a slowdown in future reductions.

Partisan Differences

While the overall picture is positive, not all segments of donors share the same optimism. Political affiliation plays a significant role in shaping economic perceptions—a dynamic Giving Sciences has explored in depth in the Politics of Giving series.

Donors identifying as left leaning have become more pessimistic about the economy since the presidential election. While this reflects a trend that applies to both sides of the political aisle following an election loss, Republicans are about 2.5 times more sensitive to the politics of the presidency than Democrats when evaluating economic sentiment. As a result, Americans overall are more optimistic about the economy with a Republican president incoming.

What Does This Mean for Year-End Giving?

Improving economic sentiment, rising consumer confidence, and a strong stock market create a favorable environment for year-end charitable giving. Increases in revenue (led by mid-major donors, DAFs, and foundations) will provide a much-needed lift for organizations grappling with donor acquisition and retention challenges in individual giving. However, sustaining this momentum requires strategic action. Charities that focus on relational approaches for engaging high-value donors, growing their monthly and digital giving programs, and delivering tailored donor experiences will be better positioned to thrive amidst the evolving giving landscape. The difference between thriving and merely surviving will come down to how effectively organizations adapt to these shifts and deepen connections with their supporters.