Choppy Waters Ahead: Economic Indicators And Orr Group’s 2023-2024 Philanthropic Giving Predictions

Created By: CJ Orr
November 30, 2023

The philanthropic sector, a crucial part of the global economy, is influenced by various economic indicators. Among these are two key influencers – the stock market, mainly the S&P 500, and consumer confidence, measured by the Consumer Sentiment Index. As we approach the year’s end, let us explore the relationship between these indicators and philanthropic giving, offering our insights into how economic changes may impact fundraising efforts.

1. The S&P 500

Impact on Philanthropy

The stock market, as reflected in the S&P 500, has a significant correlation with philanthropic giving. Historically, the philanthropic market lags the S&P 500 by +/- 50%. This means that if the S&P 500 rises by 10%, philanthropic giving will likely increase by around 5%, and the reverse is also true.

Recent Trends

Last year, the S&P 500 experienced a 24% decrease; in tandem, the philanthropic market saw a decline of about 10%. This suggests that while philanthropic giving is reactive to stock market trends, it’s somewhat cushioned by mechanisms like multi-year gifts and donor-advised funds (DAFs).

2. Consumer Sentiment Index (I:USCS)

Impact on Philanthropy

The Consumer Sentiment Index serves as a barometer for public economic confidence. When consumer sentiment is high, people generally feel more financially secure, leading to an increased willingness to donate. Conversely, low consumer sentiment often results in reduced philanthropic contributions.

Recent Trends

Sentiment was at its lowest in 2022. It has generally recovered over the past year. But, from June 1 to Oct 31, the market was a little shaky. It wasn’t until the last four weeks that the market rallied. The sentiment index has been down for the past few months but is still up for the year. This leads us to believe that, generally, we’re in a better place than in 2022, but donors aren’t aggressively giving.

Our Predictions

The S&P 500 has shown signs of recovery from the downside over the summer, and the Consumer Sentiment Index has been generally up for the full year and down for the last few months. The recent positive trends in the S&P 500 reflect a strengthening economy and bode well for the philanthropic sector, as charitable giving is inherently tied to the state of the economy. However, the consumer sentiment index shows a slowing of positive sentiment. This leads us to believe that we’ll have some choppiness ahead.

Coming off of higher inflation and higher rates, we predict that smaller donors will start to fall off, and organizations will reposition themselves to focus on major and planned gifts. We expect organizations to budget modest or flat growth next year and have fair or balanced growth in expenses. We’re cautious but believe there’s an opportunity for mild growth in the major or planned gift sector.

At Orr Group, we leverage a business mindset and a deep understanding of current and anticipated trends in both the finance and philanthropy sectors to design and execute successful fundraising plans. Get in touch with us today to discover how we can help you raise more money effectively.

CJ Orr is President and Partner of Orr Group. As an expert project and relationship manager with 10+ years of experience in the sector, CJ utilizes data, technology, and financially-backed trends to execute on the development of strategies and tactics to drive effective fundraising plans that meet or exceed targets.