It’s The Economy Stupid!
Posted on December 29, 2012
There will never be a centralized database that contains all charitable contributions made to all 1.3 million nonprofits and churches. Other economic measurements (retail sales, unemployment, manufacturing inventories, etc.) formulas (algorithms) are developed to establish a benchmark. The benchmark is then used to measure changes, establish trends, and create forecasts. Consistency and fidelity of the benchmark is vital. A few years ago, I decided to try using this proven methodology to create a measurement of charitable giving in the US.
My hypothesis was that charitable giving is directly tied to economic factors and demographic factors. I engaged a team of 25 PhD level mathematicians, analysts and statisticians to evaluate more than 60 possible variables and their interactions with charitable giving outcomes over four decades. We proved that the hypothesis is correct – Charitable giving is directly tied to economic and demographic factors and we identified exactly what those factors are. The research team used the relevant identified factors to create an algorithm that was compared with published annual giving data dating back to 1968. The algorithm produces results that correlate to 42 years of published giving history with a coefficient of correlation of 99.5%. The Atlas of Giving was born.
We then used the same process to identify the economic and demographic factors that are tied to sectors (religion, education, arts, etc.) and source (individuals, foundations, corporations, and bequests), and states. Not surprisingly, the economic and demographic factors are completely different from one sector to another and from one source or state to another. Only the Atlas of Giving has identified these unique factors and has the formulas to use them in measuring and forecasting charitable giving.
The Atlas of Giving does not rely on surveys. The input variables used in the Atlas algorithms are a handful of publicly reported economic and demographic measurements that are updated, reported and forecasted each month. As a result the Atlas is able to use the algorithms to measure total US giving as it occurs monthly and provide an updated monthly forecast.
Unlike any other index or measurement, the Atlas also monitors current events (political changes, disasters, tax policy changes, important economic factors like unemployment, the stock market, consumer confidence, etc.) and provides analysis of their impact on current and future giving. Indexes and surveys are rearward looking. The Atlas of Giving is forward focused and provides real nonprofit management utility.