Why the Decrease in Charitable Giving need NOT be a [Major] Concern – But…
The Giving USA report confirms what everyone thought it would – giving is down, about 1.7%. That is indeed real money and affirms what the nonprofit advocates and philanthropy sector warned would happen with the tax changes that went into effect last year.
There are plenty of articles analyzing those numbers, and they are real. And the dollars are real. And they matter a lot to many nonprofit organizations, especially smaller ones that are typically undercapitalized from the get-go. They truly need every penny.
Why, then, is the reduction in charitable giving not my [major] concern?
There have been blips in charitable giving every single time there has been any change in the tax code or tax rates. Sometimes those changes have boosted charitable giving and sometimes they have depressed it. But, over time, charitable giving seems to revert to a mean. In other words, tax changes have served to influence when something is given more than if. If one looks at a long-term giving pattern, it is far too early to know how significant the non-itemization will be for givers of modest amounts. My own prediction is that there will be a gradual return to the mean since Americans seem to have internalized giving as a normal thing to do.
But, that doesn’t mean that there are no red flags, and I believe that those red flags are far more significant than the short-term drop in giving:
1. Despite the claim of a healthy economy, middle and lower middle-class incomes have not yet come close to replacing the buying power those earners had a generation ago. Fewer have reliable health insurance, employer sponsored retirement plans, job security, and can afford college tuitions. Even incremental and long overdue wage increases don’t come close to closing that gap. The amazing thing is that voluntary charitable giving is keeping pace at all [other than by the very wealthy whose proportional wealth has skyrocketed and should be ashamed of themselves if they haven’t increased their giving as disproportionately.]
2. The deep-seated distrust of institutions is cataclysmic. Nonprofits may fare better than some other institutions, but they are not exempt from this distrust. One still hears too many people believing that nonprofit people are either lazy and inefficient or that they are secretly making a profit off others’ largesse – or both. All of this distrust has profound and frightening implications for civil society as a whole. Of course, it impacts charitable giving but more so, it erodes the fragile network that allows civic engagement and community organizations to provide such an important role.
3. Even if charitable giving were to rise, it may lead us to a false sense that all would be well. It wouldn’t be. The charitable sector cannot be expected to replace public funding for health care, education, retirement, food safety, children’s nutrition – and so much more. Under the horrendous rhetoric that taxes are bad so cutting them is good, we are paying the price of taxpayers no longer paying for what we should be paying for. Until we reverse that terrible governing [or, more accurately, anti-governing] principle, and develop a more rational, fair, and responsible system of taxes that people feel are appropriate, reliance on the voluntary sector will be a fool’s mission. That is not to suggest that there will not always be a role for the voluntary sector but that this increasing reliance on voluntarism to do what an underfunded government doesn’t won’t get us out of this mess.
Taxes are a reflection of where we think public funding should be. Most of us care about more than roads and bridges [would that they were properly maintained]. And we care about more than police and fire and EMT folks [even when they sometimes need some serious equity training]. I believe that the vast majority of us care about the health of our food and our children and our air and our water and our old age…..
When we recognize that being a responsible member of any society requires that we pay our fair share for those things, and we pay for those through a fair and reasonable tax system, we can begin to return to our question of charitable deductibility and voluntary contributions. When that happens, I will be first in line.
Until then, count me among those who are advocating, as loudly and persuasively as I know how, to build a society and government that honors the needs of all with integrity and dignity.
I will continue to be an active volunteer and to put my charitable money there as well, but the shortfall in that as reported by Giving USA isn’t the grievance that anguishes me. Irresponsible, shortsighted, dystopian public policy is.
Richard Marker advises funders and foundations on their philanthropy strategy through Wise Philanthropy, and teaches philanthropists and foundation professionals at both Penn’s Center for High Impact Philanthropy and NYU Academy for Funder Education.