Charitable giving grew for the fourth straight year in 2017, surpassing $400 billion for the first time, according to the annual "Giving USA" study released today.

But as the nonprofit world celebrates a milestone, the future might be less rosy. In recent years, fewer households have supported charities. Changes to the nation’s tax law alter the incentives for giving, too, and the economy and stock market could be in for some rocky times as the threat of trade wars escalate.

Here are some of the questions the latest "Giving USA" answers about last year’s climate for philanthropy, and what the numbers and experts suggest about prospects for 2018 and beyond. 

Was 2017 a good year for giving?

Yes.

Charitable giving increased to an estimated $410 billion in 2017. Adjusted for inflation, that's a 3 percent jump from 2016.

Giving by living individuals, which makes up 70 percent of total donations, grew to $286.7 billion, also a 3 percent increase over the previous year. Bequests grew slightly — by less than 1 percent ­— to $35.7 billion.

Individuals’ giving reflected 2017’s financial climate. "The most important factor in the growth has been the strong economy and, particularly, the stock market," says Una Osili, associate dean for research and international programs at Indiana University’s Lilly Family School of Philanthropy, which conducted the study for the Giving USA Foundation. 

Did 2017’s tax overhaul boost giving?

Yes.

For organizations that offer donor-advised funds, that is. For other groups, it’s not as clear.

As Republicans passed a major tax bill at the end of last year, fundraisers say, many people raced to establish or give to existing donor-advised funds — charitable accounts that offer immediate tax benefits for contributions but allow donors to select which charities to support later.

Wealthy donors, many guided by their financial advisers, wanted to take full advantage of the benefits still offered in 2017, before the sweeping tax changes went into effect this year.

"Tax reform created a boost that made donor-advised funds the vehicle of choice," says Amy Pirozzolo, vice president and head of marketing at Fidelity Charitable, which collects more annually than any nonprofit in America, according to the Chronicle’s Philanthropy 400 rankings. (Fidelity reported in March that its donor-advised funds had already made $1 billion in grants for 2018.)

For other charities, it’s harder to say how large an effect the tax bill had last year. Nonprofits thatraised more mostly attributed the spikes to the economy, the stock market, and improved fundraising practices. That’s a contrast to the impact a major tax overhaul had three decades ago. 

Are causes that big donors favor chalking up bigger gains than others?

Yes.

Groups and institutions that typically attract big donations — colleges, private schools, health organizations, arts and culture groups, and environmental and animal-welfare nonprofits — have experienced the fastest growth in support over the past several years. "Public-society benefit" organizations, a broad category that includes big commercial donor-advised funds, have also seen big growth over the past few years. "As the economy has done well, especially for wealthier Americans, that has led to more giving to traditional areas [in which] high-net-worth households give," Osili says.

In 2017, according to a study by the fundraising-consulting firm Marts & Lundy, the value of megagifts to colleges and universities rose 25 percent compared to 2016. Three out of four reported gifts of $10 million and up last year went to higher education.          

Did any causes suffer declines?

Yes.

International-affairs nonprofits were the only organizations to see a dip in giving in 2017. Donations to such groups fell 6.4 percent, to nearly $23 billion. That’s probably because the news media focused much attention on last year’s three major hurricanes affecting U.S. citizens many donors may have felt tapped out by domestic relief efforts, Osili says. 

Were Americans more generous in 2017?

No.

People aren’t giving a larger portion of what they earn, but they are increasing their donations as their incomes grow. Total giving represented 2.1 percent of gross domestic product — close to the average rate over the past 40 years. From 2014 to 2017, total giving was 1.9 percent of GDP.

Also, individual giving as percentage of disposable income was 2 percent last year, the same as the average percentage going back 40 years.

Is this likely to get better?

Probably not, experts say. Middle-class Americans in particular are giving in sharply lower numbers, probably the result of increasing bills for health, education, and other living costs. Fifty-six percent of American households made a charitable donation, according to the most recent data available. That is 10 percentage points lower than in 2000, according to the Indiana University Lilly Family School of Philanthropy. (See the Chronicle’s June cover story examining this trend.)

Still, there is reason for optimism: An enormous transfer of wealthis getting underway, with roughly $9 trillion likely to change hands in the next decade. If only 5 percent of that wealth is captured for charity, it could create the equivalent of 10 philanthropies as big as the Bill & Melinda Gates Foundation, according to new research released in April.

Did foundations give more?

Yes.

Foundation grants grew last year to $67 billion, an increase of 4 percent over 2016 and a 27 percent jump compared to 2013’s total. The bigger trend is that foundation giving is making up a larger portion of philanthropy overall than it did in years past, especially compared to a generation ago. Grant makers accounted for 16 percent of total giving in 2017, almost double the share of donations that foundations provided 20 years ago.

Strong asset growth buoyed by the soaring stock market is a key reason foundations donated more.

What’s more, the wealthiest Americans put more into their family foundations, including a $4.6 billion stock donation by Bill and Melinda Gates, a nearly $1.9 billion gift by Mark Zuckerberg and Priscilla Chan, and a $1 billion infusion from Michael and Susan Dell. (Those donations were the biggest made last year, according to the Chronicle’s Philanthropy 50 rankings.

"There are more resources available to give," Osili says, adding that most grant makers base their multiyear giving cycles on such increases in assets. 

Corporate profits were high last year. Did that prompt companies to give a lot more?

No.

Giving by corporations grew 5.7 percent, to $20.8 billion, but that figure is still less than 1 percent of overall pretax profits — similar to what it’s been over the past 40 years.

Even though profits are soaring, companies feel compelled to reward shareholders rather than give more to charities, says Doug White, a philanthropy adviser and fundraising expert. "There’s really not this pressure for corporations as entities to stand up and become philanthropic partners," White says.

Still, some signs suggest that the year ahead could be stronger: Wells Fargo has announced plans to donate up to $400 million this year, or 2 percent of its income, and other companies are promising to give more in part because they will benefit from the new federal tax law. 

Will the new tax law affect giving in 2018?

Yes.

"Giving USA" doesn’t offer a look into the future, but fundraisers are already seeing reason for concern. The chief challenge: Fewer people will itemize because the standard deduction any taxpayer can claim was raised to $12,000 for individuals and $24,000 for couples.

Donors who take the standard deduction will get not get any tax benefits for giving, and some may reduce their charitable contributions as a result, experts say — especially households that give up to $25,000 annually.

But wealthier people may also be affected because the new law limits deductions for state and local levies. The inability of taxpayers under the new federal law to deduct their state and local taxes may also discourage people who live in high-tax states, like New York or California, to make gifts, according to some fundraisers.

"We are running into some relatively young alumni: They live in New York, they don’t own a house, and they make, maybe, combined, $500,000, and they realize they are better off taking the standard deduction if their charitable contributions in a given year don't exceed $24,000," says Sierra Rosen, who oversees planned giving at Brown University. "They are the people who are looking at bunching" — giving a large gift in one year and nothing the next so as to maximize their tax advantages. 

Will giving fare well this year?

Too soon to tell.

Hard to say, but one study says giving is down so far.

Donations fell 2.4 percent in the first three months of 2018 compared to the same period in last year, according a study by the Fundraising Effectiveness Project, a collaboration of the Association of Fundraising Professionals and the Urban Institute.

Should I adjust my organization’s fundraising for 2018?

Yes.

Here’s what experts suggest:

Get ready to answer donors’ questions about how the new tax law affects them. The Oregon State University Foundation sent donors information on the new tax law and Jeff Comfort, who oversees fundraising for wealthy donors, got "a blow-away response, huge response. I got about 40 phone calls, people wanting to talk about their individual situations. The giving community is really hungry for information on this."

Talk to donors, especially midlevel ones, about whether they intend to "bundle" their 2018 gifts. Bill Zook, a fundraising consultant in Seattle, points to an example: a donor he knows who supports an arts organization with a June fiscal-year end. The organization will receive support twice in this calendar year, timed for the fiscal year ending in June and the one starting in July. "Some organizations with midyear fiscal years might want to promote that strategy," Zook says.

Bolster your organization’s capacity to accept land, appreciated stock, and other noncash gifts. Michael Kenyon, president of the National Association of Charitable Gift Planners, notes that the new tax law preserves the benefits donors get when they give appreciated assets, allowing them, in essence, to avoid capital-gains taxes.

Remind donors in their 70s and older they can give tax-free from their individual retirement accounts. Martin Hall, a partner with the law firm Ropes & Gray, has been highlighting IRA giving with his clients. People tend to feel that their retirement funds belong to them personally, rather than to their family, so they have an easier time earmarking those assets for charity, he says.

If heirs are "grumpy" about such giving, Hall says, donors can say, "It’s coming out of my IRA. That’s my money. And what’s more, you would have paid income taxes on it."

Above all, experts says, check in with your most loyal and valuable donors this year. Says Kenyon, "It’s a stewardship opportunity."