Working Together to Navigate Uncertainty

Amy Cheney

There are many reasons why an individual might choose to make a donation. An old fundraising adage says that one of the top reasons why people give to charity is that they were asked. More recently, neuroscience has shown that being generous produces positive brain effects — including a reduction of stress and production of dopamine (a happiness hormone). Giving makes people feel good. Most lists of the reasons for giving put tax benefits at the bottom of the list, but the tax deduction incentive is almost always included.

It is that last reason that has come into acute focus in the wake of the new U.S. tax bill. The pressing question today is just how much the change in donors’ ability to use the charitable income tax deduction will affect people’s willingness to give. I think the answer is that we just don’t know yet. There are parts of both sides of the argument (that giving will be negatively affected or that giving might actually increase) that appear plausible. Amid all this uncertainty, what’s a nonprofit to do?

As I read the Center for Effective Philanthropy’s new report Bracing for a Downturn: Nonprofits, Charitable Deduction Worries, and How Foundations Can Help, I had several reactions.

First, I do believe that funders can provide direct help to nonprofits during this time. As the report notes, helping nonprofits to strengthen their development efforts and apply best practices to build better fundraising plans could make a long-lasting difference.

As a nonprofit executive, I believe that solid fundraising tactics and building relationships with donors will continue to be critical in this uncertain world. It will be important for fundraisers to remember that a donor must believe in the cause and feel that the organization’s values affirm and strengthen her own.

Funders often talk about that elusive word “sustainability” — which comes by raising more funds. But for many nonprofits, every year starts over at zero! Funders can provide training opportunities (which might help more than one organization at a time) and grants for building fundraising expertise and instilling best practices in individual grantee partners. (Fundraising and relationship building take time, though.)

The nonprofit respondents’ suggestion that funders provide more general operating/unrestricted support is a great one. In a time when there may be pressures on nonprofits’ revenue streams, the more unrestricted the funds are, the better.  For those funders (perhaps a shrinking group) that are interested in supporting the start up of new projects or programs, I would encourage a different way of thinking. Forcing your grantees to apply for grants to support new programs just makes the organization’s sustainability all the more difficult. As funders, be open to providing general operating support instead.

I found it interesting to read in the research that funders did not suggest a role for themselves to help by promoting the importance of the nonprofit sector and its work. Clearly funders believe in the work of the nonprofit sector — they provide funding to help make it possible! To share the reasons behind this belief with the world would be a huge statement and a third-party endorsement of nonprofits’ work.

Funders, tell the public, legislators, individual donors, and corporations why you invest your resources in organizations that are on the front lines of improving our communities. Help our constituents understand the impact (once we know it) of the tax law change on our abilities to make a positive difference in our communities.

My time as vice president for giving strategies at the Greater Cincinnati Foundation also makes me think about donor-advised fund (DAF) holders. DAF holders are a key audience that community foundations and other providers can cultivate for their nonprofit communities. A DAF enables many donors to still take a charitable tax deduction — it just might not be every year. Funders can educate donors (particularly DAF holders) about tax-wise ways of giving — for example, a donor can “bunch up” deductions, making gifts to their DAF every other year or on some periodic pattern.

Clearly DAF providers will want to encourage this behavior, but those community foundations could also reinforce the same important messages: encouraging DAF holders to continue to fund worthy nonprofits in the community. (And help donors create a structure so that they can define for themselves what “worthy” is.)

We don’t know what the future of charitable giving will bring, but it is my hope that the nonprofit sector and the funding community can continue to work in tandem to ensure that good things are happening in our communities and our country.

Amy L. Cheney is the president & CEO of Crayons to Computers in Cincinnati, Ohio. Prior to joining Crayons, Amy was vice president for giving strategies at the Greater Cincinnati Foundation, where she was employed for more than 23 years.

Bracing for a Downturn: Nonprofits, Charitable Deduction Worries, and How Foundations Can Help is available for free download here.

charitable giving, community foundations, donors, nonprofit sector, nonprofits, research
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