Foundation, Nonprofit Leaders Concerned About Drop in Giving

Foundation, Nonprofit Leaders Concerned About Drop in Giving

While a majority of foundation and nonprofit leaders are concerned that tax legislation passed in December could lead to a drop in charitable giving, they don't always agree on what funders should do to help nonprofits, an issue brief from the Center for Effective Philanthropy finds.

Based on a survey of a hundred and seventy nonprofit CEOs and a hundred and eighty-seven staff who are responsible for programmatic work at private and community foundations accounting for more than $5 million in giving annually, the brief, Bracing for a Downturn: Nonprofits, Charitable Deduction Worries, and How Foundations Can Help (8 pages, PDF), found that 53 percent of foundation officials and 53 percent of nonprofit leaders said they were "concerned about a potential decrease in individual giving...as a result of the tax bill that takes effect this year." Fewer than one in five foundation officials (19 percent) and 14 percent of nonprofit leaders said they were not concerned, while 28 percent of foundation officials and 33 percent of nonprofit leaders said they were not sure or didn't fully understand the specifics of the legislation.

When respondents who were concerned or unsure about a possible drop in charitable giving were asked what funders could do to address such a drop, 39 percent of foundation officials and 33 percent of nonprofit leaders suggested directly supporting individual grantees' capacity to weather the adverse consequences of the new law by providing funding for capacity-building initiatives or assistance in developing or executing a contingency, sustainability, or fundraising plan. Another 20 percent of foundation officials and 25 percent of nonprofit leaders — three-quarters of them at community foundations — said funders could help educate nonprofits and the public about the consequences of the legislation and the best ways to address them.

"This level of alignment between funders and their grantees is somewhat unusual in our work," said Ellie Buteau, vice president of research at CEP and co-author of the report. "It suggests a real opportunity for funders and nonprofits to work together to ensure there's ongoing funding for crucial work that both groups care about deeply."

The survey also found that while 36 percent of nonprofit leaders who expressed concern or uncertainty suggested that funders help by promoting the importance of the nonprofit sector and its work, as well as the needs of beneficiaries, none of the foundation officials did so. "[O]ver a third of nonprofit leaders suggested one more role for foundations — a public and vocal one — that funders didn't seem to see for themselves," Buteau and report co-author Kevin Bolduc noted in a blog post. "As highly visible and often well-resourced organizations, foundations could take advantage of their name recognition and trusted status to directly appeal to individuals and other sectors to recognize and continue all the good that giving does in our society."

In addition, the survey found that 26 percent of foundation officials who expressed concern or uncertainty about a possible decline in giving said they were unsure how foundations could help, compared with just 5 percent of nonprofit leaders.

"This bill marks an important moment for the nonprofit sector," said Bolduc, CEP's vice president of assessment and advisory services. "The question on many nonprofits' minds seems not to be whether or not giving will be affected, but how much it will be affected. While we won't know the implications for certain until the end-of-year fundraising tally is complete, funders and nonprofits need not wait to ensure they are best prepared to support important work."

"Bracing for a Downturn: Nonprofits, Charitable Deduction Worries, and How Foundations Can Help." Center for Effective Philanthropy Report 05/22/2018. "New Study Finds U.S. Nonprofits and Foundations Aligned in Concern Over Tax Law." Center for Effective Philanthropy Press Release 05/22/2018. "Death and Taxes May Be Certain. Charitable Giving, Not So Much.." Center for Effective Philanthropy Blog Post 05/22/2018.