A year ago, many non-profit leaders and industry pundits predicted that charitable giving would decrease as much as $20 billion nationwide because of the new tax law. They were convinced that a reduction in tax rates and the doubling of the standard deduction from $12,000 to $24,000 would discourage individuals from contributing to their favorite charities. As with Chicken Little, they were effectively claiming that the sky was falling.
The team at Columns Fundraising studied the tax law, and we disagreed.
According to Giving USA, charitable giving hit $410.02 billion nationwide in 2017. This included increases to faith-based organizations, health and human services organizations, churches and synagogues, and colleges and universities across the State of Georgia
In 2018, charitable giving grew to $427.71 according to the latest reports from reputable sources like Blackbaud, Giving USA, and the Association of Fundraising Professionals. That’s an estimated increase of $17 billion after the new tax law took affect!
What happened?
Those who believed a decrease in giving was inevitable focused on donors who filed itemized expenses against their Adjusted Gross Income (AGI) when the standard deduction was $12,000. The experts argued that once people received a $24,000 standard deduction, they would be less inclined to support their favorite charities, because the charitable deduction would not provide an additional benefit.
While their argument may have made mathematical sense, it doesn’t take into account human tendencies. What some have called the “Trump Tax Cut” gave middle-income earners an average of $2,500 in extra cash in their paychecks. When people have more money, they tend to be more charitable. It’s a simple equation.
If a donor is in the 28% marginal tax bracket, a $1,000 gift to charity only benefits the donor $280. Would the donor rather have $2,500 in cash, or a $280 tax benefit? If a citizen has a net increase $2,220 in cash, she or he tends to be more charitable.
Conversely, you can’t give what you don’t have. When taxes increase, people have less money to give away.
The pundits’ second miscue was the belief that a large proportion of charitable contributions in the United States come from a percentage of the population who once itemized (using the $12,000 standard deduction). They believed that people would no longer itemize, now that the standard deduction was increased to $24,000. However, that’s not the population who give the lion’s share of charitable across the United States. According to the Association of Fundraising Professionals in a 2017 nationwide study:
4% of all donors give 76% of all charitable contributions—with gifts of $5,000 or more.
14% of all donors give 89% of all charitable contributions—with gifts of $1,000 or more.
33% of all donors give 96% of all charitable contributions—with gifts of $250 or more. Many who considered the impact of the tax change in philanthropy were focused on the effect on gifts under $250. While every gift is important, a gift of this size isn’t as cumulatively important to a nonprofit, or as statistically important in a study.
Overall, giving increased at various levels in 2018; the average gift size increased, and gifts by public and private increased. And mega-gifts, as defined as contributions of $10 million or more, increased by 25% from 2016 to 2017. To be sure, most charitable organizations are not going to be the beneficiary of a mega-gift, but the fact that only 4% of donors contribute 76% of all charitable contributions is a clear illustration of why charitable organizations must stay focused on their existing and prospective major gift donors.
So, why are people still making – even increasing – their charitable giving? Thirty-one percent (29-31%) of all charitable gifts go to religion or faith-based causes each year (still the largest segment of charitable giving according to Giving USA). That number is slightly higher in the South than in the northeast or west coast.
Are these donors giving because of tax benefits? No. Study after study shows that an overwhelming number of Americans give to charities because they believe in the mission of the organization, not because of the tax benefit.
Passion for the mission of an organization drives contributions, not the tax benefits.
We at Columns Fundraising believe that the best way to receive major contributions is to cultivate a strong relationship with a constituent. Stewardship of that relationship through education and engagement of your organization produces beneficial results. Don’t fall prey to political debates, or become overly consumed with what is happening in Washington D.C. And finally, don’t issue emergency cries for help.
Crisis fundraising only works for the Red Cross, because their mission is crisis fundraising. Don’t become another Chicken Little.
Wesley K. Wicker, Ed.D. is a partner and principal of Columns Fundraising, LLC., a full-service consulting firm headquartered in Atlanta. You may contact him at wes@columnsfundraising.com. Wicker earned his Doctor of Education at the Institute of Higher Education at the University of Georgia, M.Ed. in History from Georgia Southwestern State University and a B.A. in History from the University of Alabama.
Facing Coronavirus Together
in General News, Miscellaneous/by Columns FundraisingWhether you are a board member, executive director, staff member, or volunteer at a nonprofit organization, you know that your work must go on regardless of the challenges brought on by COVID-19. Two of the obvious hurdles we in the non-profit world face because of this virus are:
Gift Planning: Critical Concerns in a Changing Landscape
in General News, Miscellaneous, Planned Giving/by Columns FundraisingThe landscape for non-profit fundraising is ever-changing. This is true for capital development campaigns that include: annual operating support, program-specific, capital for buildings, endowments (building maintenance, program or operating support), or comprehensive of all types. This landscape is influenced by social media, the economy, tax legislation, technological advancements, board and staff leadership, development team staffing, and marketing efforts to reach out to potential donors.
Early in my career, Peter Buchanan, former vice president for development at Columbia University, shared six crucial criteria critical for the success of a nonprofit organization’s advancement program. By paying attention to these areas of concern, a reasonable review and audit of the development effort can be assessed:
When Politics & Philanthropy Collide on Campus
in General News, Miscellaneous/by Columns FundraisingIn an era of heightened political divide, leaders in the higher education profession find themselves walking a fine line in attempting to remain apolitical. The political divide continues to widen between many of those who make large contributions to their favorite schools, and those voices of public opinion emanating from the ranks of academe and the student body.
It struck me during my own twenty-year tenure in higher education how some university administrators willingly condoned a restriction of free speech. Some public speakers were approved, because their political views were closely related to those among the faculty and student activists. However, other speakers were banned, boycotted, harassed, or cancelled if their views weren’t in sync with the same groups.
Higher Education should be a forum where differing opinions are welcomed, debated, and yet respected. Not vilified or restricted.
The Sky Didn’t Fall
in General News, Miscellaneous/by Columns FundraisingA year ago, many non-profit leaders and industry pundits predicted that charitable giving would decrease as much as $20 billion nationwide because of the new tax law. They were convinced that a reduction in tax rates and the doubling of the standard deduction from $12,000 to $24,000 would discourage individuals from contributing to their favorite charities. As with Chicken Little, they were effectively claiming that the sky was falling.
The team at Columns Fundraising studied the tax law, and we disagreed.
According to Giving USA, charitable giving hit $410.02 billion nationwide in 2017. This included increases to faith-based organizations, health and human services organizations, churches and synagogues, and colleges and universities across the State of Georgia
In 2018, charitable giving grew to $427.71 according to the latest reports from reputable sources like Blackbaud, Giving USA, and the Association of Fundraising Professionals. That’s an estimated increase of $17 billion after the new tax law took affect!
What happened?
Those who believed a decrease in giving was inevitable focused on donors who filed itemized expenses against their Adjusted Gross Income (AGI) when the standard deduction was $12,000. The experts argued that once people received a $24,000 standard deduction, they would be less inclined to support their favorite charities, because the charitable deduction would not provide an additional benefit.
While their argument may have made mathematical sense, it doesn’t take into account human tendencies. What some have called the “Trump Tax Cut” gave middle-income earners an average of $2,500 in extra cash in their paychecks. When people have more money, they tend to be more charitable. It’s a simple equation.
If a donor is in the 28% marginal tax bracket, a $1,000 gift to charity only benefits the donor $280. Would the donor rather have $2,500 in cash, or a $280 tax benefit? If a citizen has a net increase $2,220 in cash, she or he tends to be more charitable.
Conversely, you can’t give what you don’t have. When taxes increase, people have less money to give away.
The pundits’ second miscue was the belief that a large proportion of charitable contributions in the United States come from a percentage of the population who once itemized (using the $12,000 standard deduction). They believed that people would no longer itemize, now that the standard deduction was increased to $24,000. However, that’s not the population who give the lion’s share of charitable across the United States. According to the Association of Fundraising Professionals in a 2017 nationwide study:
4% of all donors give 76% of all charitable contributions—with gifts of $5,000 or more.
14% of all donors give 89% of all charitable contributions—with gifts of $1,000 or more.
33% of all donors give 96% of all charitable contributions—with gifts of $250 or more. Many who considered the impact of the tax change in philanthropy were focused on the effect on gifts under $250. While every gift is important, a gift of this size isn’t as cumulatively important to a nonprofit, or as statistically important in a study.
Overall, giving increased at various levels in 2018; the average gift size increased, and gifts by public and private increased. And mega-gifts, as defined as contributions of $10 million or more, increased by 25% from 2016 to 2017. To be sure, most charitable organizations are not going to be the beneficiary of a mega-gift, but the fact that only 4% of donors contribute 76% of all charitable contributions is a clear illustration of why charitable organizations must stay focused on their existing and prospective major gift donors.
So, why are people still making – even increasing – their charitable giving? Thirty-one percent (29-31%) of all charitable gifts go to religion or faith-based causes each year (still the largest segment of charitable giving according to Giving USA). That number is slightly higher in the South than in the northeast or west coast.
Are these donors giving because of tax benefits? No. Study after study shows that an overwhelming number of Americans give to charities because they believe in the mission of the organization, not because of the tax benefit.
Passion for the mission of an organization drives contributions, not the tax benefits.
We at Columns Fundraising believe that the best way to receive major contributions is to cultivate a strong relationship with a constituent. Stewardship of that relationship through education and engagement of your organization produces beneficial results. Don’t fall prey to political debates, or become overly consumed with what is happening in Washington D.C. And finally, don’t issue emergency cries for help.
Crisis fundraising only works for the Red Cross, because their mission is crisis fundraising. Don’t become another Chicken Little.
Wesley K. Wicker, Ed.D. is a partner and principal of Columns Fundraising, LLC., a full-service consulting firm headquartered in Atlanta. You may contact him at wes@columnsfundraising.com. Wicker earned his Doctor of Education at the Institute of Higher Education at the University of Georgia, M.Ed. in History from Georgia Southwestern State University and a B.A. in History from the University of Alabama.
Th Economic Impact of Philanthropy
in General News, Miscellaneous/by Columns FundraisingWhen people think of economic impact, the mind usually races to large corporations and privately-held companies of the for-profit world. However, the philanthropic community is one of the unsung players in a healthy, robust economy.
Here in our hometown of Atlanta, for example, Atlanta Mission takes a person off the street every day of the year. Their mission is to solve homelessness by helping those in need find food, clothing and shelter and, perhaps most importantly, addressing the root causes that created the problem.
Nicholas House, another non-profit that works with homeless families, has a 95% success rate of keeping families from going back on the street. While major cities such as San Francisco and Seattle grapple with the dramatic increase of homelessness on their city streets, the number of homeless people in Atlanta is actually decreasing thanks to the good work of organizations like these.
What can one attribute to Georgia’s apparent success in addressing one of the society’s most chronic challenges?
Atlanta is home to a number of the nation’s largest charitable organizations, including The Task Force for Global Health and the National Christian Foundation. Both generated more than one billion in revenue last year, yet few Georgians have ever heard of either organization. In fact, the top five non-profit organizations headquartered in Georgia – which includes the American Cancer Society, MAP International, and CARE – generated more than $5 billion in revenue and employ approximately 1,000 Georgians. Other well-known, Georgia-based charitable organizations include Habitat for Humanity, Boys & Girls Clubs of America, and the Carter Center, but there are thousands of smaller non-profit organizations in the State employing tens of thousands of people.
A second major player often unnoticed in Georgia’s economic health involves corporate and private foundations. The top three corporate-sponsored foundations in the state include Coca-Cola, Home Depot, and UPS, which cumulatively awarded more than $190 million in grants in 2016, the most recent year for which data is available, alone. The top 10 private foundations (charitable foundations established by private citizens) awarded more than $200 million in grants. Altogether, the Top 10 corporate and private foundations in Georgia awarded more than $528 million to non-profit organizations; the Top 40 awarded more than $828 million.
The non-profit industry in Georgia provides thousands of fulltime jobs that often include excellent benefits that match or exceed their for-profit counterparts. These employers value hard work, education, and community engagement, and they support their local communities through educational institutions, health and human service providers, and individual support.
One example is TechBridge, which employs youth from socio-economically challenged communities. TechBridge teaches technical skills to young women and men, then helps them find jobs with partners in the non-profit industry. It’s a perfect match to improve the economic lives of individuals who may have been stuck in a cycle of generational poverty, while fulfilling the technology needs of their non-profit partners.
While for-profit businesses are the primary economic engine of the State, non-profits add a margin of excellence that makes Georgia a better place to live. When a Fortune 500 company looks at a location for a regional hub, their national or international headquarters, one of the things they evaluate is the quality of life in the city and the State. The differential between Georgia and others competitors for new business opportunities is often determined by health of a community, and much of that health is influenced by the non-profit sector.
Amanda K. Willis Joins the Columns Team
in General News, New Hire/by Columns FundraisingJohn joins the Columns Fundraising team with over 30 years of experience serving nonprofits as an advocate, volunteer and professional. Holding both an MBA from Harvard Business school and a CAP (Certified Advisor in Philanthropy) from the American College, John’s education and professional experience will be an asset to our team.
His past roles – including director of development at the Marcus Autism Center, head of foundation relations at Children’s Healthcare of Atlanta, and planned giving officer at the Carter Center – all provide him with a wealth of knowledge that will better support our clients.
Gift Planning Veteran Pete Ticconi Joins Columns Fundraising
in General News, New Hire/by Columns FundraisingJohn joins the Columns Fundraising team with over 30 years of experience serving nonprofits as an advocate, volunteer and professional. Holding both an MBA from Harvard Business school and a CAP (Certified Advisor in Philanthropy) from the American College, John’s education and professional experience will be an asset to our team.
His past roles – including director of development at the Marcus Autism Center, head of foundation relations at Children’s Healthcare of Atlanta, and planned giving officer at the Carter Center – all provide him with a wealth of knowledge that will better support our clients.