Episode 210: Reviewing Philanthropy Predictions Made in Dec 2023 for 2024. Is 80% correct possible?
Welcome to another edition of Around with Randall, your weekly podcast for making your nonprofit more effective for your community. Here is your host, the CEO and founder of Halette Philanthropy, Randall Hallett.
It's a terrific day here on another edition of Around with Randall, and I'm thankful for a few minutes of your time as we actually take a look back. As we are here at year-end in 2024, we’ll review the predictions I made 12 months ago for this calendar year—what would happen, what might be things to think about, and what to be concerned about in philanthropy.
I believe I had about eight or nine different thoughts 12 months ago, and as we do every year, we're going to try to grade these out. Over the past couple of years since I started this podcast, I'm running at about 70% accuracy. It's not terrific, but it's not bad. We'll see how we do this year. So, let's look back 12 months—what happened and what was predicted?
The first thing I predicted was that there would be a drop in philanthropy. I actually put a number to it, related to the percentage of GDP, so we can kind of keep some consistency year over year. I predicted it would be down about 1.75% of gross domestic product in the United States. Actually, the number came in closer to 2%, but it was down, particularly when you compare it to inflation.
One of the concerns regarding overall philanthropy, particularly in the non-political space, was the presidential, senatorial, and representative local elections and the increase in political spending that predominates our conversations during election cycles. You can't miss it—listen to the radio, and it’s all ads. Those dollars come from somewhere, and most of it is philanthropic in some way, shape, or form.
The concern I had was that this spending would take money out of the system. Now, we don't have the 2024 numbers yet. The last numbers we have, which I am lucky enough to access through the Giving Institute, are from 2023. But what we did see was a decrease in giving overall, and I believe we’ll see similar trends due to the record political spending we endured through the second half of the year up to the election in early November.
The prediction turned out to be pretty accurate. My number was too low, so I'll give myself partial credit. My prediction of 1.75% of GDP was a little under 2% in reality, and my note about political spending taking a toll turned out to be correct.
Number two: I predicted that with the decrease of donors seen over the last decade and a half—the number of households making gifts to any nonprofit—there would be a dramatic rise in individualized or personalized stewardship. For the third year in a row, according to the Lilly School of Philanthropy, we have seen a decrease in the number of donors, particularly in the $20–$250 range. Specifically, the number of people giving $100 has decreased by 10% over the last 12 months.
This decline has put a spotlight on the ability of organizations to steward donors on a personal level. But with 5,000 donors, you can't write each one an individual note every month—it’s just not feasible. The way people are merging or using technology to put individualized attention at the top of their priority lists has become more evident.
I’ll give you an anecdotal example from my own life. I have been a very consistent donor to the law school I attended, the University of Missouri-Kansas City. I've said many times that I wouldn't be where I am today without that education. This year, for the first time, their stewardship became truly individualized. I received a phone call from the dean on National Philanthropy Day regarding a gift. I also received a personalized video for my wife and me from the head of the foundation.
Organizations are spending more effort on personalizing their appreciation, talking about the value of gifts, and using technology like videos and online platforms to connect with donors. Multiple sources have confirmed that this trend is on the rise. I’ll give myself a checkmark for that prediction. It was an important trend in 2024 and could well carry into 2025.
Number three: I predicted that the economy would slow down. I’m going to give myself a big fat zero for this one. As an amateur economist, I love discussing the macro and micro effects of the economy. I said last year that people would have less money to spend, would probably see less purchasing power, there would be larger layoffs, and the market would likely decline.
There’s no question I totally missed on the market. I’m still surprised. Using the Dow Jones as an indicator, we’ve seen it rise to 44,000 from 33,000–34,000 a year ago—that’s a dramatic 25% increase. This increase is largely driven by corporate profits.
At the same time, some aspects of my economic prediction were accurate. Defaults on houses, car loans, and credit cards have reached all-time highs. We’re also seeing record amounts of credit card debt being carried forward each month. Yet, the stock market is up.
This leads me to believe we’re in a “K economy.” Think of the vertical line of the letter K as the starting point, and then the two diverging lines as the economy’s split paths. Some people are doing really well and driving philanthropy, while others are struggling.
But economically, personally, they're doing well. They've saved money, maybe in the past, it's in the markets. The markets are going up. So they're making more money, i.e. their net worth goes up.
With that said, on the lower part of the K, there's also a group of people that are doing a lot worse. Particularly as inflation has risen in the last three years. For whatever it's worth, I get really frustrated with the national stories around. Well, you know, it's better. I'm like, well, yeah, the increase is better. But if you bought a loaf of bread four years ago for a dollar, it's now a dollar 60. It's not going back to a dollar. So the rise or the increase might be less, but we still are living with. And that's why I talked about as my first podcast in 2023 as inflation being the most insidious part of the economic world or climate because you can't get back most of the time, the money that's lost as the cost of going up.
So I'm probably going to only give myself like a quarter credit here. I mean, I got it right on that there's less people who have the viability or flexibility to make gifts, but I missed on the overall economy. Generally, the economic numbers as a whole are pretty good. Problem is we've got a lot of people in larger groups that are suffering. I don't know what this actually means for the markets going forward. I don't know what it means for philanthropy per se with the totality. We'll talk about individual groups in the 2025 predictions in the next episode, but I'll give myself a quarter credit here. So we got two basically out of three at this point.
Correct. The number four was is that we're going to continue what I would call alignment challenges with the CEOs and in particular in healthcare, but I think in other organizations as well. Higher ed has figured this out. The one thing that I've garnered a great deal of knowledge from in the research or my book is how much time CEO, Chancellor's and Presidents in higher ed are spending in philanthropy. I've also had some opportunities to spend some time in independent schools, so maybe K through 12 independent schools where those heads of school CEOs are spending the amount of time dramatically different than five years ago, seven years ago in philanthropy.
But the challenge at my prediction was in the other parts of the nonprofit world. And the one thing that this last year has taught me is I've had multiple opportunities to go and speak about my book to state hospital associations, certainly to other associations as you get more and more people who are reading about maybe the work that I did. I'm incredibly proud of the book Fiber and Vulnerability is is that this disconnects not going anywhere. I'll just give you one kind of anecdotal thought. I get multiple listserv or news items from Beckers and if you earn healthcare, I would recommend you go there's free. They send you kind of a list of stories you can choose. I think there's probably 17 to 20 different categories IT versus CEO versus finance versus I get a couple of them and almost never is there anything in there in philanthropy.
In the same vein, I've had multiple clients over the last year in social service where this is the exact conversation I'm having with their CEOs were like, well, I'm a practitioner in the area. So maybe it's mental health or behavioral health with kids. Well, that's what my upbringing is. Yeah, you're not the CEO. You got to worry about fundraising or they are a practitioner in the area of or knowledgeable about of coming up through baby food insecurity or home or housing insecurity. They are now fundraisers and there's a constant push pull not wanting to do that, but get their organization lives by philanthropy.
What this is all saying is, is I'm going to give myself a positive check mark here. We have challenges with this alignment. We have to have CEOs that are highly engaged. Healthcare has some that are beginning to move a few, not many. Education's way ahead. That's why they raise seven times more money than healthcare. And actually, I'm seeing the same thing. Spend a number of training sessions with ministers, rabbis, priests, e-moms, religious leaders. Having this conversation with will instead of standing up at the pulpit or the front of the church and making it obligatory, why aren't we having conversations about what people really want to do within the religious space that they believe, making it more individualized? And that means I have to go talk to people about this. Yes.
So there is a disconnect. So I give myself a check there. So I'm three out of four at this point.
A number five is is that there'll be a really strong reduction or pressure on reduction on budgets. And this I've actually seen to come to fruition. I've got a number of clients that when we talk about renewals or my contracts or my opportunities, or even new opportunities that I'm very, that's how it flamethrpe very blessed to have the opportunity or the chance to serve others in my work, that there have been all of a sudden decreasing levels of budgets that's available for the particular things they need done.
I've talked to a couple of other nonprofits as well and then we'll get in the next one. We'll come back to people and there is pressure that even though you are raising maybe your ROI is five to one six to one seven one, which would, you know, be phenomenal. You're sensing pressure from finance budget CFO CEO boards to say we got to find a way to cut. We know if we are professionals in the philanthropy world that when we cut, we're not just cutting expenses, we're cutting opportunity.
But I've got one client in particular where they just really are pressing on how do we do giving per se with less money. So things like social media, social engagement, and digitalization are becoming more important. I particularly talked about the cost of postage. I look back on my notes, and it was, well, the first-class short rate was closer to 50, 55 cents. Three postal increases this last year have now brought it up to 73, 74, 75 cents for a first-class stamp. Printing costs, ink—all of those things are pushing more people into a digitalized world because that's one way they can reduce costs but still keep output or communication, connection, even solicitation still on the books. And so I think this one is a check in that we are seeing pressure on the budget.
Our sixth was the growth of artificial intelligence. For this one, I turn to my absolutely incredibly dear friend and someone I look up to when I trust with my professional and personal life, Mr. Nathan Chappelle. I asked him generically without any business context—he works and runs the Artificial Intelligence Division for DonorSearch for Bill Tadesco—how have your sales been this year as kind of the leader in this space when it comes to the growth of the AI division within DonorSearch? They are up this last year, multiple hundreds of percent in terms of the number of clients. That's telling me because they are the largest provider of this particular service—artificial intelligence, analyzing data, figuring out who are the best prospects, and who should they be building deeper, more meaningful relations with—they are seeing immense growth.
I know there are other firms out there, and I don't know quite as much about them, but my trust is with Nathan. This is telling me that there is an enormous growth and acceptance of artificial intelligence as one mechanism to do our jobs better. So that's another check mark. Ironically, that makes it now where I think 5 out of 6.
Number 7 was reducing staff, and this is related to that budget pressure on the labor markets to make sure we stay cost-effective—and that would be maybe finance's view of cost-effective versus our view. Two quick stories. I have a partnership with a group of incredibly talented, dedicated, and loyal database and financial consultants. I asked the owner of that company recently, how have your sales been this last year? The reason I asked was not per se for the work but are they doing more what I would call replacing employees that are no longer in the organization. So they become, per se, the database team, or they become the finance team, or both.
Her comment was that they're up again multiple hundreds of percent in this particular area, meaning they are becoming, as an independent contracted group, the database and/or the finance team. What this is telling you is that it's actually cheaper for the organization to have them do it permanently than hire people internally. Number one, there's a higher level of expertise. Number two, as an independent contractor, the organization doesn't have to pay benefits. What they're finding is that there's a place for this. I asked about the diversification of different sectors within the nonprofit space, and they said yep—social service, hospitals, smaller education, independent schools—we literally are becoming the substitute. With technology, they can do all the finance work remotely, and so their costs actually are less than hiring somebody to do it. The expertise is exponentially more because they do this all the time. Fascinating.
I think this is something that's worthy of thought about remote employment and/or independent contractors filling in gaps into pieces of this. Grant writing's been doing this for years because there's not many great grant writers, and they've all begun to figure out we're better off consulting. We can make more money, but it costs the client less to do the same level of work. Interesting. So that's another check mark. I'm going to give myself now seven out of eight. So I've got a half and a partial. Not bad.
Number 8 was there will be a number of mergers, closures, departments closing throughout the United States when it comes to nonprofits, and I wish I could give myself a bonus point on this one because it's sadly true. Just to give you some numbers, in healthcare, 23 hospitals closed in 2024. They range from an entire system down in Texas to a lot of rural health hospitals throughout the United States, from Nebraska, where I live, to Louisiana, to Oklahoma. The state that had the most closures was actually Wisconsin. So we're seeing an immense amount of closures there.
In higher ed, it's even more interesting. I have a list here in front of me that, in doing my research for this particular episode, there are already seven schools that have projected or announced they are closing or merging. It's higher institutions of education that are closing and/or merging effective for 2025, meaning probably the end of the academic year in the spring or early summer. Those include Bluffton University in Ohio, Texas Health Science Center in San Antonio, and St. Ambrose in Iowa. Now, these are not all closures, but they're merging—they're forcing themselves. We've got to reduce our cost and increase the number of students. So education is under siege.
In 2024, it turns out to be like three or four pages, from a technical college in Pennsylvania to Woodbury University in California, to Union Institute in Ohio, to Wells College in New York, to the College of St. Rose in New York. All closed in 2024. So this has become a real issue and is going to continue. Just to give you context, the number of colleges closing in the calendar year of 2024, depending on a couple of announcements that may come, will be the largest amount of schools to ever close in a single year that they've tracked data. I'm not going back to the Depression of the 1930s.
Hospitals are signaling this according to Beckers: 703, in particular more rural hospitals, but 703 hospitals are in financial distress today. This does not include the mergers of Boys and Girls Clubs, YMCA's, and other stories that we see throughout the United States. I wish I didn't get a plus on this, to be candid. It makes me kind of sick that we have so many nonprofits closing, but they are—or they're merging or they're closing different departments inside their organization because they're financially just not viable. The expenses have outstripped their revenue, particularly as the growth of expenses with inflation has occurred. Their revenue hasn't kept up.
The last one that I predicted last year was an increase in climate philanthropy. This is a little harder to quantify because we really don't have a place like the Giving Institute or anywhere else that we just track climate philanthropy. But I think I get a check mark here as well. So the GAEA's Corporate Philanthropy Challenge for 2024, and looking forward, was, as they call it, to mobilize one billion dollars in funding in climate and nature interventions by 2030. The attention to this is continuing to grow.
The rough estimation that the best I could find based on current data is that philanthropy in this area was somewhere between $650 million and $700 million. That’s kind of an estimate, whereas the estimate from 2023 is about $600 million. So, it’s a small increase, but it’s an increase, and there’s more conversation about it. The GA EA’s billion-dollar challenge by 2030 is evidence of that, so another check mark.
So, those are, I believe, eight different predictions from last year, and if we do partial credit, I got seven out of eight. If we don’t do partial credit, I’ll give myself six out of eight. So, somewhere between 75 and 87% accurate. Some of them I don’t want to be accurate; sometimes they’re bad news. Some of them are instructional, like if you’re not personalizing, I think the real question here is: What are you doing based on some of these predictions to be prepared for what’s coming?
That leads us to where we’re going next. The next time we gather as a group, maybe it’s just you and me on the next edition of Around with Randall, we’ll talk about 2025 and what I see there. There may be a repeater, but there are some other things we should be aware of—maybe giving you some insight on things you should be thinking about for the next calendar year.
Don’t forget to check out the blogs at How It Philanthropy. There are interesting things that I see or write about, read about, that may just give you something to think about. You can find them at howitphilanthropy.com/backslashblogs. If you’d like to reach out to me, it’s podcast@howitphilanthropy.com.
As we move into the holiday season, I want to remind you about the importance of the work that you do. We know December, with calendar years, is an incredibly important time of the year when it comes to philanthropy. The work that you do as a board member, a leader of a nonprofit, a major gift officer, a database manager—whoever you are supporting the vision, the mission, and the direction of your nonprofit—you play a critical role.
Don’t forget, there are three kinds of people on this earth at any one second. Every one of us is divided into one of these three categories. My favorite all-time saying: Some people make things happen, some people watch things happen, and then there are those who wonder what happened. What we do in philanthropy is fill that gap between the private sector and government, where it’s not really efficient for government to do it, and there’s no profitability for the private sector or business to do it. Philanthropy and nonprofit organizations sit in the middle of that.
These are people—your people—who, every day, are individuals who make things happen, no matter what role you play. And in doing so, you’re doing it for the things and the people in your community who are wondering what happened.
I don’t know, as I look back on my 2024, most days I think I don’t work all that hard. I work a lot, but I don’t work hard because I love what I do—how impactful the people I work with, the clients I serve, and how much I want to continue to remind them of the value that they play every day. And that applies to you: What you do every day makes a difference.
As we close out 2024, I’m hoping you’ll realize that your year was of value. If you worked hard and did the right things, being someone who makes things happen for the people and places in your community who are wondering what happened.
Next time, in 2025, I look forward to putting on my Carnac the Magnificent hat, opening the envelopes from—as Johnny Carson would say—from Nebraska. We’ll open those hermetically sealed envelopes and see what we look through the mist into 2025. Right back here on the next edition of Around With Randall, and don’t forget—make it a great day!