Fundraising Update

Welcome to Fundraising Update. This week, we asked some experts about their expectations — and advice — for giving in 2021. Plus, the latest figures on nonprofit job losses and a new lawsuit against a charity over the Blackbaud data breach.

I’m Eden Stiffman, senior editor at the Chronicle of Philanthropy. If you have ideas, comments, or questions about this newsletter, write me at eden.stiffman@philanthropy.com.

Thanks to sponsor Cloud for Good for supporting Fundraising Update.

Fundraising Forecast

If 2020 taught us anything, it’s that projections are hard to make.

But here we are in 2021, and I figured you’d want to know what experts think the year ahead may look like for fundraising. Uncertainty is still the watchword.

Around this time, researchers at the Indiana University Lilly Family School of Philanthropy and consultants at Marts & Lundy typically release a report to forecast the giving landscape for the year ahead. That report took into account a broad range of economic indicators including the stock market, job growth, wage growth, gross domestic product, and federal tax law.

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Nearly a month into 2021, there’s more variability and disruption than ever before, says Phil Hills, president of Marts & Lundy, and the giving experts are skipping the report.

“We don’t want to mislead our clients or the sector saying we know where we’re going,” he says. “I don’t think anybody could reliably say that they have an idea of where things really are going to go.”

One thing is certain: The big variable continues to be public health, says Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy. “The overall pace of that recovery will depend on how quickly people are able to go back to work and regular patterns of consumption,” she says.

“There will be some economic recovery in 2021, and that does bode well for philanthropy over all at least keeping pace with 2020,” she says. But the shape of the economic recovery is going to depend on the rollout of the vaccines in the coming months.

Some people were able to save more money this year by staying home, not traveling or commuting, and not spending money on entertainment. That may have left them with more disposable income for philanthropy.

The pandemic created a “shock” to normal patterns of giving, which could disrupt — at least temporarily — the long-term trend of fewer Americans giving, Osili says. If and when people start going back to familiar patterns of consumption in 2021, she says, many households form giving habits when they learn about and get involved in particular issues or causes.

“For nonprofits, the message is to continue to engage those donors,” Osili says. “Some may be in a position to continue to give.”

Another positive indicator on the horizon: With a new administration in power and Democratic majorities in the House and Senate, further federal stimulus is likely. That could be good news for giving, Osili says.

In addition to allowing nonprofits to participate in a new loan program and draw from a $3 billion economic-development fund, President Biden’s $1.9 trillion stimulus proposal would provide $1,400 in direct payments to Americans. Fundraisers should take notice — some people donated portions of earlier stimulus checks to charity.

Sweeping legislative changes like big tax increases on the wealthy are unlikely given Democrats’ razor-thin margin in the Senate and reduced majority in the House. But looking ahead, nonprofit advocates hope for long-term changes to the charitable deduction.

The Tax Cuts and Jobs Act of 2017 reduced the ability of Americans to benefit from their charitable contributions through the tax code. But temporary provisions in the 2020 and ’21 tax years designed to encourage giving during the pandemic allow single people to deduct up to $300 and couples up to $600 in charitable gifts even if they don’t itemize.

Laura MacDonald, principal of the Benefactor Group consultancy and chair of the Giving USA Foundation, is pleased that the universal charitable deduction was extended. But she and others say it may not result in a substantial increase in total giving. “The benefit is that maybe it elevates the conversation about the importance and value of charitable giving,” she says.

Read the rest of the story for more on how the stock market and donor priorities might influence giving and how fundraisers should focus their energy to keep new 2020 donors in the fold.

Hear From You

What are your expectations for fundraising in 2021? How are your 2020 year-end giving results influencing your priorities going forward? What’s your plan for retaining last year’s first-time donors? Drop me a line and let me know.

Need to Know

50,760

— Estimated number of jobs shed by nonprofits in December.

That’s a “striking reversal” of what had been months of slow-but-steady job growth among nonprofits, according to a new report from Johns Hopkins University, my colleague Michael Theis reports.

As a result, nonprofits employed nearly 930,000 fewer workers in December than they did in February, before the pandemic, a 7.4 percent decline. Arts, entertainment, and recreation nonprofits continue to be the hardest hit.

Nonprofit employment generally gained ground through the summer and fall. However, with the setback documented in the latest report from Johns Hopkins, it could take nearly 18 months for nonprofits to exceed pre-pandemic employment levels given the overall trend in the past six months. Even that forecast could worsen because of still-surging Covid numbers across the country that could result in more economic disruptions, the report notes.

Plus:

• Conservative groups are criticizing an effort to spur higher payout rates from foundations and donor-advised funds. The leaders of 65 conservative-leaning philanthropy organizations signed a letter urging Congress to reject tax proposals intended to speed up distributions from the funds, my colleague Dan Parks reports. “This proposal would severely hamper Americans’ ability to give to causes they care about,” the letter states. The proposal, developed by the billionaire philanthropist John Arnold and Boston College law professor Ray Madoff, would allow donors to claim an immediate charitable deduction for contributions to their donor-advised-fund accounts only if the funds are distributed to charities within 15 years. It also would provide a tax incentive for foundations to increase their annual payout to least 7 percent of assets annually or spend down all of their assets within 25 years.
• The Blackbaud ransomware saga continues. The guardian of a young patient whose personal information was compromised in last year’s massive Blackbaud data breach has sued the nonprofit Rady Children’s Hospital over the incident. The ransomware attack, which was first disclosed in July, exposed the personal information of millions of people whose data was held by nonprofit clients of the software provider. The San Diego hospital uses Blackbaud as its database vendor. More than two dozen lawsuits have been filed against the software provider. This suit is at least the second to target a nonprofit client of Blackbaud.
• “The laws promoting charitable giving no longer effectively serve their key purposes,” writes Roger Colinvaux, professor of law and director of the Law and Public Policy Program at Catholic University’s Columbus School of Law, in an opinion column. His suggestions to “fix problematic charitable giving laws” include creating equitable giving incentives and minimum requirements for donor-advised-fund distributions and improving oversight on the process through which new organizations easily gain charitable status.
• Charity Navigator’s new “impact score” tells donors little about a nonprofit’s true value, Liz Dozier and Lisa Pilar Cowan write in an opinion column. The nonprofit watchdog group’s new feature, designed to provide an improved measure of “how much good the nonprofit achieves per dollar of cost,” doesn’t come close to delivering on that promise, the nonprofit and foundation executives argue. Because Charity Navigator uses only data that can be standardized across organizations, they write, its primary impact measures “are overly simplistic and do not accurately help donors understand a nonprofit’s true value for the community it serves.”

Inaugural Poet Spurs Donations to a Small Charity

Amanda Gorman, the 22-year-old National Youth Poet Laureate, captivated viewers with her reading at President Biden’s inauguration last week.

She read “The Hill We Climb,” a poem both personal and universal. It described her background as “a skinny Black girl descended from slaves and raised by a single mother,” painted an unvarnished picture of struggle, and offered inspiration for a better future.

“The new dawn blooms as we free it,” she read. “For there is always light, if only we’re brave enough to see it. If only we’re brave enough to be it.”

The reading was especially emotional for Keren Taylor, founder of WriteGirl, a mentoring and creative-writing organization that helped kickstart Gorman’s career as a poet.

“To see one of our alums up there on the stage at 22, as a Harvard graduate, reading the poem she wrote that so amazingly encapsulated what has been going on in the world, for us and for America — it’s just an amazing thing. We’re really proud and thrilled,” Taylor told me.

In the days leading up to the Inauguration, WriteGirl used a newsletter, social-media posts, and individual emails to encourage people in its network to watch the reading. Aside from the donate button that’s always visible on the group’s website and in its email newsletter, “we actually didn’t put out a direct call for fundraising at all,” Taylor said.

But the spotlight on Gorman and her words has resulted in a wave of donations to WriteGirl since last week. Many of those gifts have come from individual donors, many of them new to WriteGirl, Taylor said. “It definitely feels like it’s an opening to people that haven’t donated before.” Now the small organization hopes to find ways to build on the moment.

Tips & Tools

• ‘Not Business as Usual’: How Managers Can Promote Employees’ Mental Health: Here are ways that nonprofit leaders can promote the mental, emotional, and physical health of their employees without spending a lot of money.
• How to Navigate Corporate Giving in 2021: The pandemic has transformed vast swaths of the economy, and corporate philanthropy is no exception. Covid-19 and remote work have caused many companies to reassess their philanthropic priorities. The way that businesses and charities work together is evolving, too.
• 7 Rules for Marketing Planned Gifts to Donors: Bequests and other planned gifts provide a significant source of revenue for nonprofits. Yet many donors don’t include charities in their wills simply because they’ve never been asked, says Lisa Sargent, founder of an eponymous fundraising consultancy.

What We’re Reading

• Senate Democrats want a closer look at how the Internal Revenue Service oversees tax-exempt organizations given the involvement of advocacy groups in the Capital Hill rampage. Sen. Sheldon Whitehouse of Rhode Island wants the Treasury Department to review the IRS’s policing of such groups. Whitehouse said the agency has been “bludgeoned by the right-wing forces” and that its enforcement had become lax. The IRS can revoke the tax-exempt status of a nonprofit that exceeds the agency’s limits on acceptable political activity. Whitehouse is pushing legislation to force organizations exempt under Section 501(c)(4) of the IRS code to disclose their major donors. Sen. Ron Wyden of Oregon, the presumptive chairman of the Finance Committee, has already asked the IRS to review the tax-exempt status of the groups that helped organize the rally that led to the riots. (CNBC)
• Amazon has banned groups tied to the Oath Keepers and the Three Percenters militia movements from its AmazonSmile charity program, which donates 0.5 percent of eligible purchases on the site to a user’s chosen charity. Amazon banned a total of five groups in response to pressure from the activist group Sleeping Giants. Members of those have been arrested for their suspected involvement in the attack on the U.S. Capitol. (The Verge)
• Donor-disclosure requirements for nonprofits chill free speech by scaring away some would-be contributors, and the Supreme Court should strike down the California law that gives that information to the state attorney general, Jennifer Braceras, director of the Independent Women’s Law Center and a former member of the U.S. Commission on Civil Rights, writes in an opinion article. Having their names attached to some groups can lead people to fear for their jobs or sometimes even their safety. Even laws like California’s, where the information is not made public, offer little reassurance of confidentiality in an age of hacking and doxing and little confidence that a donor list will not become an “enemies list” in the hands of an abusive politician. If it’s oversight officials want, she writes, they already have subpoena power to get donor information. (USA Today)
• The meme that keeps on giving. By now, you’ve surely seen him popping up all over the internet: Sen. Bernie Sanders scowling behind his mask and swaddled in a parka and upcycled wool mittens for the Inauguration. Sanders smartly took advantage of the moment and sold sweatshirts with his image to benefit Meals on Wheels Vermont. (Reuters) And the teacher who created his now-famous mittens made from repurposed wool sweaters is auctioning off a few more pairs for good causes. (MassLive)