Episode 261: Looking Back and Evaluating HP's 2025 Predictions Made in Dec of 2024
What a pleasure to have you join me, Randall, on this edition of around with Randall. In this conversation, we're going to look back on 2025 and see if I can keep my trend of the predictions that I do at the end of each year. So this would have been done in December of 2024. For the calendar year 2025, at somewhere about 70 or 80%, being accurate, which I find to be kind of amazing.
It's not that, I guess, because I do some research, I kind of look at trends. I read a lot of stuff, but at the end of the day, you're maybe a little bit better, but maybe not much. From Johnny Carson in being Carnac the Magnificent with his comedically sealed jar from Funchal Waggles Port reference. If you're young enough, you can go Google it.
The point is, is that we'll take a look today at what I said last year and see how I did. And then the next episode we'll look ahead with predictions for 2026. So as we look back to the December 2024 episode where I made the predictions, there were seven major predictions that I put out there as thoughts or opportunities for us to be maybe thinking about maybe planning for the possible year.
That would be so number one, kind of run through real quick, and we'll kind of break them apart a little shorter episode today. Tax policy and economic outlook would look generally pretty good if we kept the 2017 tax cuts that were coming up for renewal, and that that would drive the economic engines of the stock market and some greater, what I would call economic indicators.
Number two was that we were moving into and it would be more pronounced into a k-shaped economy and landscape, meaning that some people, as we come out of the pandemic, will continue to thrive economically while others will suffer or will be challenged. K think about one line kind of moving upward. One line moving downward. That's kind of where that comes from.
Number three is that donor advised funds and planned giving would become more prominent. And would we would begin to see some additional particular on the donor advised fund perspective or side of that particular equation, some dramatic increases in donor advised funds. Number four was that we will see some volatility in the major gift conversations. And what I'm really talking about is mega gifts, those huge gifts that come from very few people really driving philanthropy throughout the year.
Number five was is that there would be a continuation of a maybe a shift or since priorities around basic needs and climate. Number six was, is that there would be a continuation of mergers, consolidations and closures in the nonprofit space. And number seven is, is that I would become more integrated and more accepted. Let's take number one. And what kind of work through these.
The first was as mentioned was the tax policy, if renewed, the 2017 Tax Cut and Jobs Act, if it were continued coming into a new administration, that it would see a pretty strong growth economically, particularly in the stock market. Well, in July 4th, there was the bill that was signed on the white House front lawn that was very strongly supporting and even going further, the 2017 Tax Cuts and Jobs Act, making some things more permanent and actually increasing some things.
What that's done is seen a dramatic increase to the stock market this year is that we've seen, you know, somewhere between 7 and 10%, depending on what market indicator you look at that people's stock portfolios, investments have grown dramatically. And what that's done is, is it's driven an opportunity for more dollars to be available for philanthropy. We also receive the great work that's done, which I'm lucky enough to be a member by the Giving Institute in partnership with the Valley School Philanthropy, who do phenomenal work around the giving USA report.
And we saw that giving in 2024, when we finally had the numbers in July, was a record and almost $600 billion. All this is to say is, is that the economic conditions remain pretty strong. And that's usually a good sign for individual giving, particularly those with the most amount of resources. Now I know what some are. You were saying.
And I'm going to get to this in number two on the K economy. So give me just a brief moment to come and say, well, wait a minute, because I made this prediction as well, that overall, the economic indicators in the United States pretty good. Inflation's running somewhere about 2.7%, 2.8%. That's down obviously from eight 9% from 1819 months ago.
But we're seeing the markets go crazy. Also we've seen an increase in home equity because of rising prices. And we've seen job creation. All these are generally pretty good sign. So on number one I'm going to give myself an A on that one. That's pretty strong prediction and was really correct. Number two but this is what I was saying a moment ago.
We are moving into a K shaped recovery and economy. I predicted that this will become more pronounced. While I was absolutely correct on number one, that there was a great growth in the stock market, great growth in economic growth. At the same time, I said people are suffering and that we are underestimating the amount of pressure that is being placed on most families in the United States.
And in the last six months of this year, that has been incredibly true, that what we find is, is that inflation over the last several years has eaten into the buying power of many families, and most families make their charitable gifts on an annual basis. I'm not talking about me mega gifts or estate giving, just their regular gifts through their disposable income 25, 5000, $500, whatever that is.
And what we're finding is, is, are fewer and fewer people who have that ability. We also saw coming out of the Fundraising effectiveness project that while the dollars have increased, we talked about that as we looked at 2024, in the July release of the giving USA report, is that the donor counts continually continue to drop, meaning fewer and fewer people households are making gifts.
I think this is a perfect illustration of the K economy. Those with resources, with it, with assets are seeing growth. Those who have less debt are seeing growth. Maybe even those who locked in particularly like home debt or mortgage at 2.53%, are seeing growth. The problem is, is that most people didn't do that. And so you have all of these now barriers based upon inflation from being able to purchase a home to being able to afford groceries.
The average new car is now over $50,000. We are pressing into some enormous headwinds when it comes to affordability, and that's the essence of a k driven economy that people, if we think about a K capital K and the two points coming together on the on the vertical, on the vertical line on the left, people are growing in wealth.
The problem is it's a very narrow line. People are receding in wealth or at least in disposable income. That may mean wealth and a much thicker line going down. And so on. This one I'm going to give myself an A plus. Plus. I hit one and two out of the park and I really wish I was wrong, particularly on the second one.
First one is probably good for everybody who has assets. The problem is, number two is showing us that there is a more, more family struggling, which affects philanthropy. Less people giving less people. Maybe longtime donors. And I think I've mentioned in many different podcasts throughout the year that I have a number of clients that are asking, where did our annual fund go?
And I even gave some recommendations on things like behavioral economics several episodes ago as a way to combat this. So number two, unfortunately, I was right. Number three is the increase in donor advised funds and planned giving the plan, giving things a little bit nebulous. But what we're seeing is, is that dramatic growth in donor advised funds. We have learned that the average fund dollar amount or average total within a individual donor advised fund is nearly $140,000.
Now, and that Fidelity Charitable Charity charitable reported a record almost $15 billion in grant making out of donor advised funds. That's almost a 25% jump. Donor advised funds are becoming absolutely the destination for many people with assets that are looking for longer term donations and also deductibility. That's more immediate. These donor advised funds, as you might remember or know, or maybe you hear here and kind of begin to understand, allow for someone to put the funds in today, be able to allocate them out to nonprofits down the road and receive an immediate tax deduction.
So what we're finding is, is that there's a just an immense increase in expansion in both the growth of the funds and the allocations of the funds. So I'm going to give myself another A+ plus on this one. The numbers show that this is becoming more and more of a destination for philanthropic giving, or at least philanthropic holding, until they leave that entity out of the donor advised funds to get to the nonprofits.
And you might tune in next time, because I'm going to talk about this one more specifically, what I think is going to start to become conversation in 2026. Number four is gift concentration and volatility amongst mega givers. Interestingly enough, this is another one which probably is a maybe an A minus. The numbers are showing us more and more that mega donors make it.
Gifts are making up more and more of organizational opportunity for philanthropy. Now, what's mirrored with that are bigger plans. What we know traditionally and holds true today is, is if you want someone to give you a big 25 million for 50 million doesn't make a difference. You need a plan, a strategic initiative, an impact that's 2 to 3 times that gift that people at that level want to know that their gifts are going to make an enormous difference.
They're making an investment. It's not a gift. It's an investment in the community, in the things they believe in. And so what we have found is, is that the giving you, as a data says, is that we're incredibly top heavy when it comes to the total amount of philanthropy in the United States, as we mentioned, almost $600 billion.
It is incredibly top heavy, kind of running into that 3 to 4% of the population or gifts being making up 95, plus 97% of the dollars coming in that we're seeing that, this major gift activity. So if we go just below the mega gifts or transformational gifts, major gifts, FIP, the Fundraising Effectiveness Project, is saying this is the driving force of success, which is something we've talked about for several years.
All this is to say is, is that fewer and fewer people making a bigger a bigger difference. So the identification and relationship building process with those individuals is quintessential. And so that's a pretty another a minus so far for, for, for and then we're going to get to a couple that maybe I wasn't quite spot on with.
Not bad, but certainly not a material. Number five is the that basic needs and climate. We're going to see dramatic increases in philanthropy. What we do know is I probably get half of this one that and we don't have all the full numbers. But what I would say is, is that we're seeing initial numbers that would indicate that basic needs is a driving, increasing force in philanthropy, as we have particularly seen with the government shutdown in in October and beginning of November, that places things like in places like food banks or food insecurity, housing insecurity.
It was immense growth because we saw a number of people having to, frankly, go to work but not get paid. And our government and a number of stories anecdotally, but the numbers are going to show this, that we saw a dramatic increase in support in these basic services. What we didn't see as much is the changes or increase in climate support.
I did not anticipate as much as I predicted, the economy number two, to be somewhat of an accurate, you know, view into the future. Back a year ago, I did not anticipate its impact, meaning the bottom part of the K that people will give to climate. It's a it's a more and more discussed issue, as it should be.
But if you can't put food on your table, you're not as worried about the Amazon rainforest and the pressure that's on a lot of families because of inflation is really pressing us when it comes to other, what I would call disposable income, which is now less non immediate needs. Now there were going to be those who argue and I'm not going to argue against them that climate is an immediate need.
But again it becomes about your kitchen table. If you can't take care of what's going on at the kitchen table, it doesn't make a difference what's going on over there. So this is probably a C plus or a B. I got the food and insecurity and housing, but I didn't get the climate piece. Number six was about mergers and consolidation and closures.
And this one's probably a B or a B. Plus. It wasn't as much as I thought it was. So in consolidations, we've seen places like, multi-state nonprofits of the YMCA, the Boys and Girls Club begin to collapse administrative work around maybe a more centralized model. So not everybody's got the same, infrastructure. They're kind of using a central infrastructure with, support out into the community, to the various clubs or YMCA gyms.
We've seen a dramatic, effort by leaders. Deloitte had a fascinating statistic last month that 75% of nonprofit leaders have considered consolidation. How do we reduce our costs? I have a client, in the social service area that is going through this conversation. They happen to be the ones that are bigger and really, really well run who are now having nonprofits come to them and say, can we roll into you?
Can we can part of you, which is an interesting dynamic. We did see 25 hospitals that have closed this year. There have been 84 colleges over the last several years that have closed. We're just seeing this, as I would call it, a trickle. It's not a wave. And I'm not sure I said the word wave last year, but I anticipated it would be more pronounced.
That's good. I don't want to see anyone close. I do think this is something we have to keep an eye on in the future. So this is a B, maybe C plus. Yes, this is happening. I, I think that it's not an AA because the numbers weren't there. I would also posit this in this category. There was an interesting series of statistics that came forth in in various readings, but 21% of nonprofits in 2025 reduced their services, 29% had less employees, they didn't consolidate, they didn't close.
But they're reducing services and reducing employees. And obviously, for most employees, or what drive the operational success? The mission, that's a challenging issue. And so that's why it's probably about a B mixed a little bit uncertain, not conclusive, but moving in that direction. Unfortunately for some the last is number seven is I integration fundraising. I certainly didn't predict that it would be everybody would be using it.
But I, I think I said pretty clearly that there would be more acceptance to it. And on this one, I would say anecdotally, I'm probably correct there isn't the data to support this as a factual thing, but we're seeing more AI usage in nonprofits. We've had data being analyzed by artificial intelligence. So grateful patient programs, analysis with universities, with their particular donor base, with alums, other looking at the community, predicting who might be the most likely to want to engage.
That was true in 2320. At the end of 2324, it was growing, 25 continued. I think where we're seeing it more often is in organization, and I'm not endorsing them. I'm just knowing that they've done a great deal of work in this. I don't know their product specifically, but it is a company like momentum that is helping organizations build individual stewardship plans based on AI.
So, they're taking the data within the CRM, what they know or can find publicly, and be able to create individual thank you notes, actual plans, reminding people to make phone calls and thank people on certain days that is becoming more pronounced. I did see something at AHP that I think was one of the cooler things I've ever seen in AI, but was an interactive model or program or service that would allow almost a role play.
Philanthropic conversations all based on AI. So you basically you're talking to this camera and it's a pretend person, and you've given them parameters of who they are, what they want to do. And it's the gift officer job to figure that out in the conversations, whether it's qualification, cultivation or solicitation or torture. Fascinating. I think that's going to become more pronounced.
So on this one, I would say it's directionally true. I would say that it's growing, but there's not a lot of data to prove it. Probably another B or so. So overall all seven I was directionally correct. The first four I was really correct. And the two the k-shaped economy and donor advised funds and plant giving I had out of the park.
I gotta tell you, I'm not sure that makes me all that smart, but it does make me lucky. The reason I do this is it gives you an opportunity to maybe hear from someone who deals with nonprofits around the world. So I'm placing my predictions. If you tune in next time for 2026 on the conversations I'm having, what I'm seeing, what the data is telling me when I work with clients, what they're experiencing, what we what we're challenged with, and what we work on to figure out how to create solutions for them.
All of this kind of brings me to the particular predictions that I make. And so last year, these were the seven and not bad. It's running a little bit last year, 2020 for this year, 2025 above what I'd done in the past. But I'm hoping that they give you a chance if you're willing to listen for planning. What can we do with this information to make what we need to do in the next year more successful?
That's the reason I do it. I don't care if anybody gives me credit for anything. In fact, in my own house, I'm not sure I get any credit at all. I'm not sure I deserve any. The point is, what can I do to make your life, others lives, nonprofits lives, philanthropy better? And if I can see something coming down the pipeline, I'm hoping that I'll share it so that you have a chance to do something about it.
2025 overall interesting year. We'll look forward to 2026. We'll talk about what might be happening next year on the next edition around random. Don't forget to check out the blogs how it's going to be two per week. If you'd like to reach out to me, have the last several podcasts of normal editions of kind of a challenging issue.
Set it up, break it down, and then give tactical solutions come from email or email me podcast at Hallett philanthropy.com who said I've got this challenge or issue. Can you address it? Glad to do that. Send me an email and know. Lastly, as we come near towards the end of 2025, the value you've delivered this year for the nonprofit that you work with, whether it's an employee, the Chief Philanthropy Officer, major gift officer, infrastructure team, annual fund, special event, you're a board member, you're a CEO, you're donor.
You're making a difference. Which brings me to my all time favorite saying, which I use in each and every podcast at the very end. Some people make things happen. Some people watch things happen. Then there are those who wondered what happened this year. You were someone who made something happen for the things in your community, for the people in your community who are wondering what happened.
And that's a contribution that makes the world a better place. I end this way each time, and I made this decision early on, because the work that goes on in the nonprofit space is sometimes not seen kind of under the covers, but yet it doesn't make it less important. And so my goal in the end of each podcast is to lift up you or anyone else that is contributing to making the world a better place through your nonprofit.
Doing so in a meaningful way and letting you know, even though I don't see you, I see you and I say thank you. Thanks for doing such a great job. And by the way, not a bad way to spend a professional career. I'll look forward to seeing you in the next time. 2026 looking forward the next time, right back here on the next edition of around with Randall.
Don't forget. Make it a great day.