First Quarter of 2021 Offers Good News for Nonprofits

The key economic indicators that experts say are important to nonprofits went well for the first quarter of 2021, and they also point toward continued strong growth for the second quarter of 2021, according to the Chronicle of Philanthropy. Here is a quick recap of several indicators highlighted by the Chronicle:

1. Gross Domestic Product increased by a 6.4% annualized rate in first quarter 2021. The broadest measure of the economy, the U.S. gross domestic product increased at a sharp clip in the first quarter, driven by stimulus payments, expanded unemployment benefits, and Paycheck Protection Program loans. This follows a strong fourth quarter in 2020, where GDP expanded by 4.3%.

Between late February and early April, the national economy grew at a “moderate pace” as consumer spending increased, according to an April Summary of National Economic Conditions from the Federal Reserve System.

2. The stock market’s S&P 500 and Nasdaq Composite indexes both rose more than 5% in April, continuing a pattern of positive gains from previous months.

3. The national unemployment rate dropped slightly, from 6.2% in February to 6.0% in March, according to the Bureau of Labor Statistics. Roughly 575,000 people filed for first-time unemployment claims in the week ending April 24, a new low in the pandemic era and continuing a long, slow downward trend.

4. Consumer confidence is up. Buoyed by increasing domestic vaccination rates and stimulus checks, consumers are feeling better about the economy, more so than they have in a year, according to the University of Michigan’s Consumer sentiment index. Preliminary results for April 2021 show a nearly 2% increase in consumer sentiment since March and a 20.5% increase over April 2020. Out of a maximum possible value of 100, the Index of Consumer Sentiment was rated at 86.5 in the University of Michigan’s survey.

5. Regional economic indicators show “moderate” to “strong” growth across U.S. regions. The Federal Reserve‘s Beige Book report, a regular summary of regional economic activity, cited consistent signs of economic expansion at the regional level. The New York-New Jersey economy grew at a “strong pace” for the first time since the pandemic began. Other regional economies reported similar moderate to strong growth rates since February.

In another Chronicle of Philanthropy article, the overall number of donors in the United States grew by 7.3 percent in 2020 compared with 2019, according to the Fundraising Effectiveness Project’s analysis of giving at nearly 2,500 organizations.

For economic-impact trends specific to ECFA members, see ECFA’s most recent survey report, “Remarkable Resilience: The 2021 Financial Outlook for Churches and Ministries.”

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.