Is GDP Inextricably Linked With Corporate Giving?

By Nita Kirby 

A strong market, rising income and personal net worth is a foundation for success in nearly any economic setting. Studies show that gross domestic product (GDP) has a direct influence on the state of philanthropy in the United States, but are the two inextricably linked?

Over the past four years, we have seen a steady growth of corporate philanthropy in the U.S. When taking a look at overall giving during the recession of 2008, we see numbers drop drastically. Total donations plunged by 7 percent in the U.S. in 2008, and 6.2 percent in 2009. The link between GDP and corporate giving may seem overt, but few dig deeper to see if there is a direct correlation. Let’s take closer a look.

The correlation between GDP and giving

The average growth in GDP has long been used to determine the expected growth in corporate giving for upcoming years. The latest Philanthropy Outlook on 2016 and 2017 says corporations are predicted to increase giving by 4.7 percent this year. These rates are higher than the 10-year and 25-year statistical average for corporate giving. So, what did Philanthropy Outlook base this prediction on?

  1. Average growth in GDP
  2. Above-average growth in corporate savings

The GDP annual growth is expected to be around 2.267 percent in 2017, compared to 1.532 percent last year. With corporate giving expected to increase by 4.7 percent, giving is growing faster than the national GDP.

“That growth in total giving has been outpacing growth in our nation’s GDP? I believe that is information Americans can wrap their heads around and celebrate. I hope everyone who either works within philanthropy, donates to philanthropic causes, or benefits from the good work such organizations do, will participate in helping this level of growth continue and even increase.” said Jeffrey D. Byrne, chair of the Giving Institute.

The Charities Aid Foundation conducted a study to look at GDP and giving internationally. The organization examined charitable giving in 24 countries as a percentage of GDP. The U.S. ranked first in terms of Nominal GDPmeaning within a country’s borders. These high levels of charitable behavior, along with the drop in philanthropy during recessions, both reveal the importance of GDP in the predictions and reality of corporate giving.

There are many other factors that affect charitable giving outside of the GDP. Economic factors such as corporate savings and the S&P 500 also affect corporate giving rates. Corporate savings are corporate profits that are left over after dividend payments and taxes. The expected increase of these savings are also a factor that is expected to increase, increasing corporate giving in 2017.

One way to gauge philanthropy’s impact on American society is the fact that it is large enough to be measured as a percentage of GDP, accounting for about 2.1 percent of it in total. Of that, corporate giving is about 5 percent, which amounted to $18.46 billion in 2015. Is your company a part of this statistic?

Image credit: Flickr/asenat29

Ms. Nita Kirby serves as Director of Client Strategy and oversees CyberGrants’ strategic service management with a majority of its corporate clients. In addition, Nita is responsible for ensuring the success of philanthropic programs for many of CyberGrants’ key customers and oversees process improvements for how the company manages its client’s programs and relationships. This effort includes detailed benchmarking, employee engagement methodologies and financial modeling. Nita serves on numerous non-profit and volunteer boards and continues to stay engaged with the local non-profits community. Nita has worked for one of largest non-profits in the US, where she provided extensive support to some of the largest employee giving programs in the country.

With a BS in Business Administration and vast experience in program development and administrative protocol, this experience has allowed Nita to incorporate best practice processes in each of her client engagements and focus on deliverables and client satisfaction. In addition, Nita is a Lean Six Sigma certified Green Belt providing her with expanded insight into how processes affect outcomes.

Learn more about recession proof corporate philanthropy, including employee volunteering, payroll giving and more: Cybergrants offers the ability to manage all your giving and employee engagement under one roof.

Corporate Responsibility

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