Accept No Substitutes, There Is Only One Genuine Charitable Giving Forecast
Posted on February 27, 2015
The Indiana University Lilly School of Philanthropy has just released its Philanthropy Outlook for 2015 and 2016. These are the same folks that give you Giving USA each year.
According to the report, this is an econometric model used to forecast charitable giving for the next two years. Like the annual Giving USA estimate, this new forecast provides no real utility and by its own admission will miss significant events that have an impact on giving.
Frankly, I am not sure why money and time was devoted to creating this when it is in no way an improvement or enhancement to what already exists.
The Atlas of Giving has been providing a reliable giving forecast since 2011. Unlike the IU report, the Atlas of Giving forecast is updated monthly because events like stock market corrections, 911 type events, and natural disasters have a significant impact on giving. Any good forecast needs to be updated regularly. Just ask the National Weather Service.
The Atlas of Giving forecast contains monthly data for next month, the next 3 months, the next 6 months, the next 12 months, and for the calendar year. The forecast includes actionable monthly forecast data for 9 giving sectors, 4 sources of gifts, and for 50 states. The Atlas of Giving forecast is updated monthly and is made available at no charge through www.atlasofgiving.com. The accuracy of the Atlas of Giving forecast is fantastic. Like any forecast, the accuracy of the Atlas forecast declines as the forecast period increases. Here are the actual measured accuracy numbers for the Atlas of Giving:
The IU Philanthropy Outlook will only be updated annually and only includes a gross forecast for total US giving with some basic information about the four sources of gifts. It contains no actionable monthly data, no data about giving sectors, no geographic data and has no way to account for major economic events, disaster events, and political events. Why is this important? Consider the year 2001. That year was shaping up to be a fine year for giving until the horrific events of September 11 unfolded. Following this cataclysm, giving to non-disaster related causes virtually dried up for 6 months. This had a very significant impact on 2001 and 2002 giving totals. The IU forecast is not equipped to adjust to this kind of event. The Atlas of Giving is updated monthly for precisely this kind of scenario.
Interestingly, I discussed all of this with Alex Daniels, a reporter for the Chronicle of Philanthropy when he called for an interview this morning. But because the Chronicle is so closely aligned with Giving USA, he mentioned none of this in his article.
It is important to consider that for many years, the Chronicle of Philanthropy has featured the annual Giving USA report release each June with extended coverage and has benefited greatly from increased advertising revenues associated with this issue. In order to protect its income stream, the Chronicle of Philanthropy has given the IU Lilly School of Philanthropy and their Giving USA product preferential treatment and is reticent to ask their paramour tough questions. The Chronicle has repeatedly demonstrated its lack of journalistic integrity and ability to be objective when it comes to the Indiana University Lilly School of Philanthropy, Giving USA, and the fundraising consulting firms that keep all of this alive financially and advertise in the Chronicle.
I find it interesting that the IU / Giving USA research team does not include anyone with any significant nonprofit leadership or fundraising experience. They are all credentialed academicians. But of course there is no substitute for real world nonprofit and fundraising experience. I guess the Chronicle of Philanthropy doesn’t see this as a problem since they never ask the IU team or the Giving USA Foundation about it. It is also interesting that there is no mention of this being a part of Giving USA in spite of the fact that the research team is the same for both.
After IU created its model, it conveniently back-checked it against Giving USA total giving data only going back to 2003. I say conveniently because had they gone back to 2000, the model would have completely missed the impact of September 11, 2001 on US giving. However, on page 9 of the Technical appendix of the IU report, their research team acknowledges that the model only works in “normal times”. How’s that for a confidence builder for nonprofit leaders who are making planning decisions based on this information?
Here is a quote from the Technical Appendix… “The model performs quite well through 2007.” (From a 2003 base year) “But the financial crisis of 2008 caused a prolonged substantial decline in the growth rate of actual giving that the model fails to catch.” Really? How many ‘normal’ years are there going to be anyway?
After more than 30 years in the nonprofit sector, I think you can sense my frustration. We created the Atlas of Giving to be a utilitarian benchmarking and planning tool. Our motivation was to increase the effectiveness and efficiency of the nonprofit sector by continually monitoring the velocity and trajectory of US giving in order to enhance budget and fundraising planning with real data. I am having a difficult time understanding why IU and Marts and Lundy, the financial sponsor of this new forecast, find it necessary to create a new forecast with so many inherent shortcomings. It is as if they are dedicated to replacing Apple’s MacBook Pro with the 1981 version of the original IBM PC. Disappointing. Very disappointing.