A majority of nonprofit chief executives and foundation leaders believe fundraising will suffer under the new tax law. But, according to a survey released today, the two groups disagree, in part, on how to respond.
More than one-third of 170 nonprofits surveyed by the Center for Effective Philanthropy said that to prevent losses in revenue, foundations should become more vocal in promoting the importance of nonprofit organizations as a whole. In response to the same question, foundations shrugged. None of the 187 participating foundations identified advocating for nonprofits as the proper response to a potential decline in giving.
In comments accompanying the survey, some nonprofit leaders described such advocacy as “inspiring” the public with efforts like marketing campaigns.
Nonprofits “see foundations as having a voice, a platform, and a position from which they can speak and be heard,” said Ellie Buteau, vice president for research at the center. “Perhaps foundations don’t realize, or might not be thinking about the value of that in a way that nonprofits are.”
Leaders from both grantees and grant makers share similar views on other ways foundations can help nonprofits as they face the possibility of declining revenue. One-quarter of nonprofits and a similar percentage of grant makers said foundations should educate both nonprofit workers and the public about the implications of the tax law.
And more than one-third of respondents from both groups said foundations should help nonprofits build their capacity to raise money, including working with grantees to develop fundraising plans, cultivate new donors, build fundraising staffs, and deploy marketing blitzes.
Lost Giving Incentives
Nonprofits have raised concerns about the new law largely because it doubles the standard deduction people can take when they file their taxes. The increased standard deduction is expected to result in fewer people itemizing charitable gifts separately, thus watering down the charitable deduction as an incentive to give.
Another giving incentive was weakened when lawmakers doubled the estate-tax exemption to $22 million for couples.
In the comments accompanying the survey, community-foundation leaders, who depend on large gifts, were especially vocal about the need for grant makers to assist nonprofits in their fundraising and to educate the public about the new law.
“We’re less worried about a significant decline in annual giving than a potential decrease in large, transformational gifts driven by estate planning,” one community foundation official told the center. “Supporting nonprofits in strengthening their development capacity and in strategic planning around long-term financial sustainability may be helpful.”
Although a slight majority of the both nonprofit and foundation leaders are bracing for a fundraising decline, a significant number of them — about a third — said they didn’t know whether the tax changes would have an effect or they didn’t fully understand the new law.
Kevin Bolduc, the center’s vice president for assessment and advisory services, said much of the uncertainty is due to conflicting accounts in the press about the possible impact of the law.
“It remains to be seen how much this will affect individual giving. Predictions from the think tanks are all over the place, from minimal change, to massive change,” he said. “Because so much individual fundraising happens in the latter quarter of the year, there are some folks taking a wait-and-see attitude.”
