Posts tagged ‘Doing Well by Doing Right’

June 20, 2019

I Told You So: Charitable Giving is Up!

Most charity pundits, mainstream media, and press serving the nonprofit sector got it wrong. Sadly, none of them is admitting their mistake, and many are continuing to advance a false narrative. However, I always told you the truth, and I’ll continue to do so.

I’ve often encouraged you not to overuse statistics in your appeals. But, we can all certainly benefit from reading lots of illuminating statistics.

In 2017 and 2018, most pundits and the media were convinced that the Tax Cut and Jobs Act would result in up to a $21 billion decrease in philanthropic giving. In January 2018, I joined a tiny group of professionals who predicted the decrease in giving would be far less than that and giving might actually increase. This was not a guess on our part, but a well-educated expectation based on research, experience, and observation.

Now, with the release of Giving USA 2019, we know who was correct.

Overall, philanthropic giving in constant dollars INCREASED by $2.97 billion (0.7 percent) between 2017 and 2018, and now stands at $427.71 billion, the highest level of all time. Relative to Gross Domestic Product, giving remained at 2.1 percent, which is greater than the 40-year average of 2.0 percent.

Despite the generally good news, the philanthropy scene is not entirely positive. When adjusting for inflation, giving in 2018 did decline by 1.7 percent, though that was much less than the doom and gloom estimates. Furthermore, giving by individuals as a share of overall philanthropy accounted for 68 percent; this is the first time since at least 1954 that it has fallen below 70 percent. In 2018, individual giving fell by 1.1 percent in constant dollars.

While the new tax code likely had an effect on charitable giving, we need to be careful not to overstate its impact. A number of factors have influenced giving:

New Tax Code. All or part of the decline in individual giving in 2018 could be due to donors taking action in advance of the tax law change. We saw this in 1986 when there was a spike in charitable giving in advance of the Reagan tax cuts in 1987.

In 2017, many donors likely front-loaded their philanthropic giving since they would no longer be able to deduct gifts beginning in 2018. In addition, many donors chose to bundle their philanthropy by contributing to Donor-Advised Funds at record levels in 2017. Together, these two factors might explain the 1.1 percent decrease in individual giving in 2018 compared to a 5.7 percent increase in 2017. If not for the new tax rules going into effect in 2018, some of those 2017 donations might have been made in 2018 instead.

The tax code might also affect giving in other ways that we just don’t see clearly at this point. Just as we had to wait until 1988 to see giving normalize following the Reagan tax cuts, we may need to wait another year or two to understand the full effect of the current tax code.

Decline in the Number of Donors. Since 2001, the percentage of US households contributing to charity has fallen steadily from a high of 67.63 percent to 55.51 percent in 2014, according to data from the Indiana University Lilly Family School of Philanthropy’s Philanthropy Panel Study. In other words, the new tax code is not responsible for a sudden decline in the number of donors. This trend has been going on for years.

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June 30, 2016

It’s Time for You to Speak Up!

A jury recently convicted U.S. Rep. Chaka Fattah (D-PA) of federal racketeering, bribery, and conspiracy, a total of 22 criminal charges. Days later, Fattah resigned his Congressional seat. The court will sentence him in October. He is likely to appeal.

The saga of yet another corrupt, unethical politician might not normally attract much attention from the nonprofit sector. However, this particular story should. And you should be outraged.

Among other things, prosecutors argued that Fattah used charities he created to funnel funds for his personal benefit:

  • Funds were stolen from a Fattah-founded charity to repay an illegal $1 million campaign loan.
  • Fattah created a fake charity that received federal funds that were then misappropriated.
  • Fattah-founded charities were used to launder stolen funds.
  • Fattah-controlled groups received federal grants, but tried to cover up what happened to that money when officials conducted financial audits.

Furthermore, a Daily News investigative report stated:

…nonprofits founded or supported by the Philadelphia congressman have paid out at least $5.8 million to his associates, including political operatives, ex-staffers and their relatives.”

Despite Fattah’s abuse of the public trust, his Democratic Party colleagues have been tepid in their reactions:

U.S. Rep. Bob Brady (D-PA) — “It’s a shame to have something like this happen.”

Hear No Evil... by MASK Productions via FlickrPhiladelphia Mayor Jim Kenney — “The jury spoke, and the criminal justice system went forward.”

Ed Rendell (former Philadelphia District Attorney, former Philadelphia Mayor, former Pennsylvania Governor, and former Chair of the DNC) — “We’re not all bad. We’re not all evil.”

U.S. Rep. Nancy Pelosi (D-CA) — “Heartbreaking.”

While the responses from the political sector have been weak, the nonprofit sector has been infuriatingly silent. Where is the Association of Fundraising Professionals? Where is the Pennsylvania Association of Nonprofit Organizations? Where is Charity Navigator? Where is The Chronicle of Philanthropy?

I was very frustrated by the deafening silence from the nonprofit community. Instead of a yawn or a shrug, we should be condemning Fattah’s abuse of the public trust and his misuse of nonprofit organizations because his misdeeds negatively impact the credibility of all nonprofit organizations. We should be demanding that the Pennsylvania Office of the Attorney General investigate Fattah and his charities. If appropriate, Fattah should be charged with violations of the state’s laws governing charities and the charities should be held to account.

Then, I realized something. I have a platform. Therefore:

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March 15, 2013

Do You Know How to Navigate in the Gray Area?

I recently published a post about how City of Hope plans to host a special fundraising event at odds with the organization’s mission. Most readers who responded to a poll at the end of the post felt the event is inappropriate with many even finding the event unethical.

The unscientific poll reveals that 49 percent of respondents feel that the “Let Them Eat Cake” event is “Inappropriate but Not Unethical,” 27 percent say the event is “Unethical & Inappropriate,” 13 percent say the event is a “Great Idea All Around,” and 10 percent believe the event is “Appropriate, Whether on Mission or Not.”

I’m comforted to know that over three-quarters of the respondents feel the same way as I do about the City of Hope event. However, some of the comments I’ve received on this blog site, on LinkedIn, and via email concern me a bit.

Perhaps the comments are a result of how I worded the post or phrased the poll responses. Some people seem to be under the impression that one’s actions are either purely ethical or purely unethical. In certain cases, those folks would be correct. Some actions are clearly ethical or not. Stealing money from Girl Scouts selling cookies (this really happened) is clearly unethical.

However, not all situations are black and white, ethical or unethical.

While the legality or illegality of an action is certainly a guideline, such as the theft incident I just described, something can be unethical without being illegal. SScales of Justice by mikecogh via Flickrome situations in which we find ourselves put us into a gray area. The most challenging ethical dilemmas often involve situations that are not black and white. If they didn’t, they really wouldn’t be dilemmas, would they?

When considering the possible, multiple responses to a situation, we will often find some alternatives are more ethical while some are less ethical. In the case of City of Hope, the organization could choose to continue to host its “Let Them Eat Cake” event without any changes although many readers found it at odds with the nonprofit’s mission and, therefore, unethical. Alternatively, the organization could choose not do any event.

However, the organization has other options. For example, City of Hope can run its cake event but offer healthy alternatives and educational material as well. Or, the organization could host a different event like the Healthy Chef Competition in Vancouver, Canada that Rory Green, a development professional and blogger, told me about.

Again, some alternative courses of action are more ethical or less ethical than others. The objective should be to always choose the best option, make the best decision.

The most challenging ethical dilemmas of all, however, do not have any good, ethical solution. They’re no-win situations. Think of the novel/movie Sophie’s Choice or the “Kobayashi Maru” test from the film Star Trek II: The Wrath of Khan. Even in these no-win situations, we must cope as best as we can to be the best we can.

As those who work in the nonprofit sector, we must understand that our greatest asset is the trust of the public. The more trust people have in charities, the more likely they are to donate. And, with greater trust comes larger contributions.

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