Data and measurement sometimes get a bad rap in philanthropy. Here at CEP, one useful role we try to play is to balance information about timeless topics, like how to build strong funder-grantee relationships, with data that is crucial for smart decision-making on timely ones. So, when something happens that is likely to fundamentally influence the nonprofit sector — such as the 2007 economic downturn or the 2016 presidential election — we try to quickly collect useful data that can inform the way nonprofits and foundations think about and react to these important events.
In January, when the Tax Cuts and Jobs Act took effect, we knew our sector was facing just such a moment. Nonprofits had tried and failed to scuttle the bill — or at least get better treatment for charitable giving. The media — with the notable exception of The Wall Street Journal Editorial Board — fairly unanimously portrayed the legislation as a threat to historically high levels of charitable giving. The question didn’t seem to be whether giving would be affected — it was just how much charitable giving and bequests would drop.
So, in January and February of this year, we surveyed nonprofit CEOs and the foundation staff who hold the highest level of responsibility for programmatic work at their foundations. We asked them whether or not they were concerned about a potential decrease in giving to nonprofits, and if so, what they thought foundations could do to help. CEP is releasing a research brief today titled Bracing for a Downturn: Nonprofits, Charitable Deduction Worries, and How Foundations Can Help, in which we share what we learned.
A majority of nonprofit and foundation leaders said they are concerned about a potential decrease in charitable giving, we discovered. An additional third said they are not sure about the implications or do not understand the new legislation well enough to have an opinion. Given the number of worried articles, tweets, and emails that spread through the sector as the bill made its way through the legislative process, these findings didn’t really surprise us.
What did surprise us, though, was that nonprofit and foundation leaders were mostly aligned in seeing what role foundations could play during this time of worry. Both groups suggested that here was a moment, if ever there was one, in which foundations could support the capacity needs of nonprofits — particularly by providing assistance to nonprofits in developing or executing against contingency, sustainability, or development plans, or to build their fundraising muscles. Likewise, both nonprofit and foundation leaders (particularly community foundation leaders) see a role for foundations in educating nonprofits and the general public about the effects of the new legislation.
Also interesting to us was that over 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. These nonprofits suggested that to counteract any decline in giving, foundations could play an important role by speaking out to the public and to other sectors to broadly endorse the value of nonprofits, the importance of their work, and the needs of their beneficiaries. 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.
While the actual implications of this new legislation won’t be tallied until end-of-year fundraising drives, the roles that nonprofits and foundations play need not wait. Foundations can certainly talk to nonprofits now about opportunities to strengthen the fundraising and economic-planning capacity of nonprofits. They can consider whether they are in a good position to educate nonprofits and the public at large about what the new legislation means and why charitable giving matters regardless of the laws for deductions. And they can reflect on their opportunities to raise their voices — alone and together — to reinforce for all of us that nonprofits, their work, and their beneficiaries are important and worthy of support.
Bracing for a Downturn: Nonprofits, Charitable Deduction Worries, and How Foundations Can Help is available for free download here.
Kevin Bolduc is vice president, assessment and advisory services, at CEP. Follow him on Twitter at @kmbolduc.
Ellie Buteau is vice president, research, at CEP. Follow her on Twitter at @e_buteau.