Posts tagged ‘Barack Obama’

November 8, 2018

Did the Midterm Elections Help or Hurt Your Nonprofit?

I’m a news junkie. So, I was up very late on election night, actually very early the next morning. Now that I’ve caught up on some sleep, I’ve been thinking about what the midterm election means to charities. In this post, I’ll layout some of my nonpartisan thinking. Just be warned, I’m also going to share some statistics and a bit of history as we consider what the election means for the nonprofit sector.

The midterm elections this week resulted in the Democratic Party regaining control of the US House of Representatives. Let’s put that into a bit of historical perspective. Despite successfully securing a majority in the House, the Democratic Party’s much-hoped-for Blue Wave did not materialize. As I write this post, the Democrats are expected to gain a 27 to 34 seat advantage over Republicans in the House. However, Republicans not only hung on to control of the Senate, they actually enhanced their position by three to five seats.

To put the Federal election results into some context, let’s look at the 2010 midterm elections during President Barack Obama’s second year in office. Going into the 2010 election, Obama’s approval rating was six points higher than Trump’s was prior to the 2018 election. Nevertheless, Democrats lost 63 House seats and lost six Senate seats.

“[The 2018 midterm elections are] only the third time in the past 100 years that the party holding the White House has gained seats in the Senate in a midterm election while losing seats in the House,” according to MarketWatch. “The President’s party has won seats in both the House and Senate just twice in the past century in a midterm election.”

This all means that both Democrats and Republicans can declare success this week. But, what about the nonprofit sector?

While it’s too early to know with any certainty, there are some things we learned on election night and other things we can learn from history:

1. Impact on the Election. In the lead up to the vote, nonprofit organizations flexed their muscle along with their corresponding Political Action Committees. On a variety of issues, the nonprofit sector demonstrated that it could have a profound impact on public policy. Regardless of where you stand on the issues, here are just a few examples to illustrate the point:

In Massachusetts, the American Civil Liberties Union, Human Rights Campaign, MassEquality, Planned Parenthood Advocacy Fund of Massachusetts, The Yes on 3 Campaign, and other organizations joined forces and scored a massive victory on election night when voters, by a two-to-one margin, reaffirmed the rights of transgender people.

In North Carolina, voters approved a measure directing the legislature to amend the state constitution to guarantee the right of citizens to hunt and fish. This was a victory for the Congressional Sportsmen’s Foundation and the National Rifle Association.

In Florida, the Humane Society of the United States and PETA persuaded voters to change the state constitution to ban greyhound racing.

Nonprofit organizations have political power. When nonprofit organizations join forces, they can have a dramatic effect on public policy.

2. Good News for the Stock Market. Historically, Americans prefer divided government, so it’s not surprising that Democrats were able to regain control of the House. Like the populace, the stock market also prefers divided government.

“Here’s what Investor’s Business Daily found, looking at S&P 500 returns during each two-year election cycle, from election day to election day. The best outcome, an average 18.7% two-year return, came when Congress was divided. Unified control of Congress by the same party as the president yielded an average 17.3% two-year gain. When control of Congress was unified under the opposition party, gains averaged 15.7%.”

If the stock market goes up, many donors will own appreciated stocks that they can donate to charities. Foundations will see their stock holdings grow and, therefore, have more money to grant to nonprofits. That would be good news for investors and charities.

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November 15, 2016

Will the Election be Good or Bad for #Fundraising?

[Publisher’s Note: This is not a political or partisan post. Instead, this post will explore the affects the recent presidential election is likely to have on fundraising and philanthropy in the short-term and beyond. As always, civil and on-topic comments are encouraged, whether or not you agree with the points covered in the post. However, overtly political or partisan comments will not be published nor will the rants of internet trolls.]

 

Donald J. Trump appears to have secured enough electoral votes to become the USA’s 45th president. His election will become official when the Electoral College votes on Dec. 19, 2016.

After a bruising, though not unprecedented, election cycle, the nation remains deeply divided and emotionally raw. What does this mean for fundraising and philanthropy?

Impact of Election Donations on Charitable Giving:

At the 2016 Association of Fundraising Professionals International Fundraising Conference, research from Blackbaud was presented that looked at the impact of political giving on charitable donations in the 2012 election cycle.

Chuck Longfield, Senior Vice President and Chief Scientist at Blackbaud, observes:

Fundraisers have long debated whether or not political fundraising affects charitable giving and, for decades, important fundraising decisions in election years have been based largely on the conventional belief of a fixed giving pie. The study’s overall assertion is that political giving during the 2012 election did not, in fact, suppress charitable giving. Donors to political campaigns continued their support of charitable causes.”

According to the study, donors who gave to federal political campaigns in 2012 gave 0.9 percent more to charitable organizations in 2012 compared to 2011. By contrast, donors who did not give to political campaigns reduced their giving to charities in 2012 by 2.1 percent. These data findings held true across all sub-sectors as well as the demographic segments of age range, household income, and head of household gender.

The research only provides us with a snapshot. It is not predictive. More research will need to be done to identify whether or not the results will be consistent over multiple election cycles. However, based on the analysis of the 2012 campaign cycle, we certainly have room to be cautiously optimistic about 2016.

Year-End Giving:

If history is an indicator, the 2016 election will have little or no impact on overall year-end philanthropy, according to Patrick Rooney, Ph.D., Associate Dean for Academic Affairs and Research at the Indiana University Lilly Family School of Philanthropy.

voting-by-becky-mccray-via-flickrAt times, elections have had an effect on the giving of some individuals. For example, in 2008 when Barack Obama was elected, some major donors feared that he would secure a 28 percent cap on tax deductions.

Out of fear that the cost of giving would, in effect, be going up in 2009, some of these individuals front-loaded their 2009 philanthropic support to 2008 year-end. Nevertheless, the impact on overall giving was modest.

While Trump has promised major tax reform, it’s doubtful that donors will expect significant changes to the tax code to be enacted and go into effect in 2017. Therefore, it’s equally doubtful that major donors will shift 2017 giving into 2016.

Given that the 2016 election was unusual in many ways, it is certainly possible that year-end giving will deviate from the historical norm. For example, the stock market reached a record level following the election. If stock values continue to grow, we could see an increase in year-end gifts of appreciated securities. However, regarding overall philanthropy, I think the smart bet is on history.

Giving to Individual Charities:

It is very likely that certain individual charities will see an uptick in donations as a result of the election outcome.

Many years ago, Richard Viguerie, a pioneer of conservative direct response fundraising and Chairman of ConservativeHQ.com, said that people would rather fight against something than for something. We’ve seen it before; we’re seeing it now.

For example, when Obama was elected, the National Rifle Association received significantly more contributions as some feared that the new president would impose more stringent gun control measures.

Now, Kari Paul, of MarketWatch, reports:

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August 9, 2013

Philanthropy at Gunpoint?

In a recent op-ed piece in The Chronicle of Philanthropy, Mark Rosenman writes, “… few people in the nonprofit world seem aware of a new legislative proposal that could add $35-billion a year or more to [charity] programs perhaps including their own organizations.”

Rosenman is referring to a new tax proposal by Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) that would impose a financial-transaction tax modeled on one adopted by the European Parliament and soon to be implemented by 11 of its member nations in order to slow flash-trading.

The Harkin-DeFazio plan, called the “Wall Street Speculators Sales Tax,” “has drawn the support of over 40 national nonprofit organizations and labor unions but has not caught the imagination of local and regional charities or the major coalitions that represent nonprofit groups,” according to Rosenman.

While I encourage you to read Rosenman’s op-ed article as well as the comments, many made by me in a tense exchange with Rosenman, I’ll share with you here what’s wrong with Rosenman’s support of the new tax plan:

1. The Wall Street Speculators Sales Tax will NOT benefit the nonprofit sector as it currently stands. Harkin and DeFazio introduced the tax plan to generate revenue to reduce the deficit. Right now, there is no reason to believe that even one cent would flow through to the community benefit sector. Rosenman initially misleads his readers on this critical point and does not provide clarification until the comment section.

2. Even if Congress could be persuaded to give the new revenue to the nonprofit sector, it raises a number of questions. Who would decide which charities should receive the money? On what basis should those decisions be made? Given that so many large charities employ lobbyists, would the new government spending go to those with political influence or those with vital programs that produce desired outcomes?

3. More government funding is not necessarily a solution to our problems. The federal government is already spending an enormous amount on the nonprofit sector. Government spending on nonprofits has grown from $100 billion a year in 1962 to an astounding $3.6 trillion in 2012, according to a report in The Wall Street Journal by James Piereson, a Senior Fellow at the Manhattan Institute and President of the William E. Simon Foundation.

If a 36-fold increase in government spending on the charity sector since 1962 has not produced the desired result, will an additional $35 billion do the trick? At what point will government be spending enough on the charity sector?

The charity sector’s enormous appetite for government money (really taxpayer money) has created an interesting dynamic. Piereson points out that many of the charities that receive the most government funding turn around and lobby the government for even more money and for higher taxes! This kind of dynamic is created when nonprofit organizations start being funded like and acting like government agencies rather than charities.

The nonprofit sector’s reliance on government funding is dangerous. It encourages institutional laziness, a loss of independence, a lack of public responsiveness and, perhaps, aligning mission with government objectives rather than constituent needs.

Marvin Olasky observed in his book The Tragedy of American Compassion, greater government involvement in and funding of the social services sector historically has led to a pullback of private support for such organizations.

I’ve served on the boards of social service agencies, most recently for an organization helping children.

Piggy Bank by Images_of_Money via FlickrThe social service agency received virtually all of its funding from the government in the form of grants and contracts. At that time, the agency was meeting just a quarter to a third of the need in the community. But, to its credit, the agency eventually set the goal of meeting the needs of 100 percent of the community. The organization recognized that it would never be able to achieve this goal if it continued to be so dependent on government funding. Therefore, the agency launched a major, sustainable push for private funding.

An interesting thing happened. As private funding grew, the organization’s service capacity also grew. With a strong, compelling case for support, the agency has now raised the necessary resources to meet the needs of everyone in its community! While government funding is still important, the organization has achieved a healthier more sustainable funding balance that allows it to serve far more people and serve them better.

Richard Freedlund, on the greatergoodfundraising blog, states, “The problem is, if your budget is so dependent on government funding and not donors, you really do not fit the definition of a charity.”

4. The proposed tax would affect more than the wealthy. Rosenman stated that the new tax would primarily impact wealthy and institutional investors. However, that’s like a tuna fisherman saying his nets primarily catch tuna, and we should not worry about the dolphins also caught in the nets. The fact is institutional investors represent mom and pop investors and pension funds for working Americans. The majority of people in the US own securities.

Rosenman says the tax really won’t add up to much money for these small investors, so I shouldn’t worry about them. But, I had another idea. I asked my 86-year-old mother what she thought about the new tax idea.

Before I tell you what my mom said, let me just mention that for a huge chunk of her life, she was poor. I’m talking coal-stove heat, no bathroom plumbing poor. Together, she and my dad worked hard to put food on the table and a roof over our heads. As a result of a strong work ethic and a commitment to saving, she now has a modest nest egg, some of which she invests in mutual funds.

Here’s what my mom said about the new investor-tax proposal with Rosenman’s suggested modification for charities:

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May 15, 2013

Special Report: IRS Scandal Shakes Washington

This week, the US Internal Revenue Service acknowledged and apologized for behavior that had long been rumored. The IRS improperly targeted for extra scrutiny conservative groups seeking tax-exempt status.

IRS logoThe IRS did not ultimately deny tax-exempt status to a single group receiving extra scrutiny. Some say this proves that the actions of the IRS were baseless.

The scandal has now shaken the nation’s capital:

President Barack Obama directed Jack Lew, Secretary of the Treasury, to request the resignation of Steven Miller, Acting IRS Commissioner.

Miller resigned and Lew accepted the resignation.

The Justice Department has initiated a criminal investigation.

Exercising its oversight responsibility, Congress has begun its own probe of the IRS scandal.

Obama addressed the nation on television saying, “It’s inexcusable and Americans are right to be angry about it and I am angry about it. I will not tolerate this kind of behavior in any agency, but particularly the IRS given the power that it has and the reach that it has in all of our lives.” He promised reforms.

When wrongdoing by the government is uncovered, it is rightfully news. But, this latest government scandal cuts deeper.

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September 28, 2012

How Much Do the Candidates Donate, Pay in Taxes?

This Presidential Election campaign season, the mainstream media has paid a great deal of attention to candidate tax returns. Now, I’d like to join the conversation by looking at the candidates’ 2011 federal tax returns.

In this post, I’m not going to suggest that one candidate is better than the other. I’m certainly not going to endorse a candidate.

While we may disagree on what the numbers mean or whether they mean much of anything at all, I suspect we’ll all agree that the numbers are interesting to look at, at least for a few moments.

From the perspective of public policy, Barack Obama wants to limit tax deductions for charitable giving. For his part, Mitt Romney has hinted that he may also seek to limit the tax deduction for charitable giving but, so far, he has not offered specifics about where he stands on the details of tax policy.

So, I thought it would be worthwhile to review how much money each candidate has contributed to the US Treasury and to the nonprofit sector.

I’ll leave it to you to decide how relevant or important this information is to your voting decision or what you think the potential impact is for the nonprofit sector.

I’ve put together the following chart based on a Fox News report that looked at candidate tax filings for 2011:

 

CATEGORY

OBAMA

BIDEN

ROMNEY

RYAN

ADJUSTED GROSS INCOME

$789,674

$379,035

$13,696,851

$342,416

CHARITABLE DEDUCTION

$172,130

$5,540

$2,250,772

$12,991

CHARITABLE GIVING %

21.8%

1.5%

16.4%

3.8%

FEDERAL TAXES OWED

$162,074

$87,900

$1,935,708

$64,764

EFFECTIVE TAX RATE

20.5%

23.2%

14.1%

18.9%

GIVING + TAX %

42.3%

24.7%

30.5%

22.7%

 

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