3 Trends in Philanthropy Your Nonprofit Team Should Know About

We’re coming to the end of another year soon, and if you’re like me, you’ll keep your eyes focused through the windshield instead of the rearview mirror. The philanthropic sector continues to evolve, like everything in society, due to forces such as wealth, technology, and globalization.

When I started my nonprofit organization more than a decade ago, we were in a different landscape than today. Transparency, social media, and millennials in positions of influence and management – increasingly embraced by Gen Z as the marketing world begins to shift its gaze to the next brilliant generation – have brought about a huge change.

But, if you are like me, then you are interested in staying one step ahead. As you start looking to tie up the year and we move into 2018, here are some of the trends you want to watch out for.

• The rise of foundations and impact investing. Stanford Social Innovation Review reported on partnership relationships between foundations, government, and corporations for impact investing, which is funding a cause or community that seeks both benefit and social impact. As we know, Detroit has suffered for years due to its adverse financial challenges and its single-family home market, which was decimated by the 2008 recession. The Kresge and Ford Foundations, in partnership with local banks, the city and the state developed the Program. Home Mortgage Board of Detroit, to provide home buyers with renovated homes with a combination of grants and loans. Another impact investing venture is a partnership between the McKnight Foundation and Mellon Capital Management and also the Chan Zuckerberg Initiative with billions of dollars to eradicate disease and improve the education and lives of children.

With the extraordinary accumulated wealth it has within institutional organizations, there is now greater openness to generating measurable social impact in the community as public funds dwindle. Foundations have knowledge and understanding of what it means to invest in a community, and leading organizations are now using their expertise and massive capital to help lower risk for other investors, such as cities and corporations.

• Extraordinary wealth has led to more gifted inherited foundations. Americans have a broad philanthropic culture. The reality is that we live in a time of unprecedented levels of wealth for a few (in the hundreds of billions of dollars) and also rich in millions for others, and the culture of philanthropy continues. And since Americans are exceptional capitalists, financial institutions have figured out how to make sure they get a cut of money management fees. We know there is a dirty little secret in the philanthropic world with Donor Advised Funds (DAFs) that allow donors to get immediate tax deduction, but massive amounts of money are parked in DAFs and not in nonprofits or nonprofits. charities.

At just $ 5,000 to $ 25,000, more and more Americans are creating legacy foundations, making, for example, the Fidelity Charitable Gift Fund one of the largest foundations in the US. With billions under management as donors create their own legacies due to brilliant marketing. . Basically, Fidelity, Schwab, Vanguard, and others have taken care of the expense and hassle of creating their own foundation, and for convenience, they can manage the money.

• Government money and regulations get stricter. The trends will continue, and especially if there is a tax reform. The federal government is moving toward massive tax reform, and two essential elements would impact charities:

1. There is interest in putting a cap on the charitable deduction.
2. One of the goals of the tax reform is also to limit the standard deductions.

Tim Delaney, executive director of the National Council of Nonprofits, said in this article: “Both would be a considerable success not only for nonprofits, but also for the people they serve … The increase from the standard deduction will be a disguised assault on charities giving in the name of tax simplification … The charitable and philanthropic communities are coming together instead for a universal deduction for giving. ”

While I acknowledge that most charities and nonprofits in the US are small, and you could tell yourself that you don’t believe any of these realities affect your group, that’s not necessarily true. If there is a tax reform, that will likely affect the vast majority of nonprofits as donors begin to reassess their charitable intentions. And even if your charity does not receive money from global foundations, the idea that the public and donors are much more open to donating to public and private partnerships, especially those where profit is made, is essential for the leadership of your nonprofit organization understands it. In other words, there are many more ways that donors can support society, besides a direct donation to charity, especially if they have wealth and want the impact to be broad and scalable.