Last year, United Philanthropy Forum and our members across the country fought to prevent federal tax reform from causing harm to the charitable sector. Unfortunately, the final tax bill passed by Congress significantly reduces charitable giving incentives, which many expect to result in a notable drop in individual donations, as several reputable studies show. Although another year will pass before we know the tax bill’s true impact on giving, a new report from the Center for Effective Philanthropy, titled Bracing for a Downturn, shares the thoughts of nonprofit and foundation leaders on how the sector can prepare right now for a potential downturn in donations.
The study found that the most common role that funders see themselves playing to support nonprofits in response to the tax legislation is — not surprisingly — their role as funders. Thirty-nine percent of foundation leaders surveyed said that the best way they can help grantees weather a downturn is to provide funding and other support to help their grantees build capacity in areas such as developing or executing contingency, sustainability, or fundraising plans, or cultivating and managing donors. A similar percentage of nonprofit CEOs (33 percent) also cited a need for funders to play this role to help them prepare for drops in giving, although they tended to focus more specifically on getting help to strengthen their fundraising and marketing efforts and receiving more unrestricted grants. (Again, this was not surprising.)
But there was one finding in the study that I found somewhat surprising — and disappointing. The most common role that nonprofit leaders think funders can play to support them in responding to the tax legislation — mentioned by 36 percent of nonprofit CEOs — is for funders to broadly promote the value of nonprofits, the importance of their work, and the needs of their beneficiaries. However, zero foundation leaders — as in zero percent — suggested this role for themselves to support nonprofits now.
I’ve written before about how philanthropy’s voice is more vital now than ever before in our sector and our country, including to lift up our country’s civic and moral values in an increasingly polarized society. The public has more trust in charities than the government, and leaders in philanthropy can speak with a voice that is typically considered more independent, nonpartisan, and committed to the common good than leaders in government or business.
In responses to the CEP survey, nonprofit leaders suggested that foundation leaders could use their voice to inspire the public about the nonprofit sector and use their “trusted” position in the nonprofit landscape to push for increased support of nonprofits from new donors and funders. One nonprofit leader noted that funders can “educate the general public that support is crucial for nonprofits and that without their support many services that assist those who live in poverty or are disabled will not be able to continue.” Another nonprofit leader noted that funders can help by simply “showing up at our events so others can see the vote of confidence.” This is not a heavy lift but is vital to the sustainability of many organizations.
Nonprofit leaders clearly understand the power of philanthropy’s voice in advocating for the nonprofit sector. The question is, why doesn’t philanthropy understand the power of its own voice, and/or why does it seem so unwilling to use that voice? There are no legal barriers to foundations advocating as much as they want on behalf of the nonprofit sector. So what is the barrier?
Our country is increasingly relying on, and calling for, a strong philanthropic voice. If the expected decline in charitable giving actually comes to pass, or even if it doesn’t, I hope that philanthropy will step up to speak in a bigger, stronger, and more forceful way to policymakers and the broader community about the value of the nonprofit sector to our civil society — and the importance of supporting nonprofits to ensure the health and well-being of our communities.
David Biemesderfer is president & CEO of the United Philanthropy Forum. Follow him on Twitter at @dbiemesderfer.
Bracing for a Downturn: Nonprofits, Charitable Deduction Worries, and How Foundations Can Help is available for free download here.