Navigating the Future: Philanthropy and a Changing World
By: Susan Raymond, Ph.D., 09/17/04

This essay is the first in a six-part series that will examine how various elements of life in America will impact philanthropy and nonprofits in the coming years. What subjects will they need to address? How engaged will Americans remain with philanthropic institutions?  In this series, we will project data out to the year 2015, including projections of philanthropy, economic structure, population structure, socio-demographics, and public expectations.  Rest assured, you are not about to read a dissertation, an experience no human should have to weather more than once.  Rather, the data will illustrate the constant forward-thinking that is necessary if philanthropy and the nonprofit players are to stay relevant in a changing world.

Before beginning with the first of these six essays projections of philanthropy let me admit that Yogi Berra was, as usual, correct in observing: “It’s tough to make predictions, especially about the future.”   All predictions should be accompanied by humility.  Nevertheless, a failure to anticipate and prepare for both opportunity and threat condemns an institution to mediocrity.  So, let us begin.

Philanthropic growth in the U.S. is a function of many constants (notably the American people’s propensity to give) and many variables (especially the state of the economy, but also changing demographics).  Over time, philanthropy represents an amazingly stable portion of American wealth, whether measured by percentages of national income, percentages of disposable income, or percentage of corporate profits.  Given that stability, the key variable in the near term is a growing economy.  While it is true that, if pushed out to mid-century, trends will be heavily influenced by the passing of the baby boomer generation, in the nearer term (which is more appropriate for institutional planning), economics will out.

It is important to recognize that any projections of philanthropy will be wrong, and will likely be wrong by underestimating rather than overestimating.  Much philanthropy is uncounted and perhaps uncountable (for example, the dollars tossed into the volunteer fireman’s boot by cars full of families slowing winding their way to the parking lots for an Army football game). Many newer approaches to philanthropy (for example, cause marketing supported not by a corporate foundation but by the marketing department) are not even in the correct spreadsheet column to be counted.  For what is countable, projections need to disaggregate philanthropy into its constituent parts, because their historic growth rates are very different.  So, let us do that, and then re-add.  Further, let us do so assuming a low rate of growth and a high rate of growth, so as to be both conservative and liberal at the same time (a feat requiring some dexterity in this political year!).

We will project data using the median rate of change for the last decade and the median rate for the last two decades.  This will result in a projection that assumes that the sector performs consistently in the future only at the midpoint of its past performance. 

Let us begin with corporate philanthropy.  In the last 30 years, corporate philanthropy has doubled in inflation adjusted terms.  But very high rates of growth have only been experienced in the last decade.  Hence the two decade median is the low annual rate of change and the one decade median is the high rate of change.  The low result projects corporate philanthropy to a level of $17 billion in 2015, and a high estimate of $23.5 billion.  Respectively, this represents a 50% and 100% increase over today.

Projections of individual giving result in an even wider range.  In 7 of the last 20 years we have seen rate declines; 5 of the last 10 years have seen annual growth of over 9%.  Again, applying the decade median as a high estimate and the two-decade median as a low, individual giving in 2015 will range from a whopping high of half a trillion dollars (an unlikely result) to a low of a quarter of a trillion dollars.  The low estimate is still 25% higher than current levels of individual giving.

Bequests now represent only $21 billion, but their annual rates of growth have been in the double digits in seven of the last 20 years.  Again, the one decade mean is higher than the two decade mean.  The resulting projection results in a bequest total in 2015 of between $44.8 billion and $35.4 billion, between 100% and 60% more than its 2003 total.

Foundations have had inflation-adjusted declines in giving in only 4 of the last 20 years, although the huge jumps of the mid- to late-1990s are seriously skewed by the entry of the Gates Foundation into the foundation fray.  However, the year-to-year change over time does even out, with the mid-1990s gains perhaps skewing the 2003 base but not the median change.  Indeed, for foundations, the two-decade median is higher than the one-decade median.  Foundation giving projections for 2015 range from a high of $63.9 billion to a low of $58 billion, in either case more than doubling 2003 giving levels.

So, re-aggregating, the exercise results in a 2015 projection of philanthropic giving of between $360 billion and $630 billion in 2015.  Even the low estimate is a 50% increase over total giving in 2003.  And that rate will need to be achieved in just 12 years.

A third of a trillion dollars is not loose change from the sock drawer.  It is, by any measure, significant money.  And 12 years is a narrow timeframe indeed.  How will philanthropy manage such growth in such a short period?  By doing more of what is done today?  By doing what is done today differently?  Or by seizing the opportunity to anticipate global, demographic, social, and economic change -- and meeting the emerging problems head on.

It is that change, and its philanthropic implications, that the next five essays will discuss.

Sources:

Raw data from Giving USA, 2003.