Drumming Up Non-Profit Anxiety

I'm going to go ahead and preface this all by saying that I think I might have "economic crisis fatigue".

I once believed that the economy was something very concrete and absolute; full of numbers written in black ink (not red - or worse, pencil), formulas, spreadsheets, graphs and more zeros than I could comprehend. The "economy" as I understood it had nothing to do with, nor could it be bothered by, things like "confidence" or "anxiety".

An article published in the Star Tribune yesterday entitled, "Recession, plans to limit charitable deductions intensify anxiety among donors and nonprofits" drums up even more anxiety about the economic situation and for non-profits specifically.

According to the article, there is a "separate proposal to limit the deductions that couples earning more than $250,000 can claim for charitable gifts. Under the plan, a donor in the highest tax bracket would save $280 on a $1,000 charitable deduction, instead of $396." So the deduction isn't going away, it's just decreasing, right?

I need more concrete numbers on what this will actually mean for someone giving to non-profits because I'm skeptical that it's as catastrophic as this article leads me to believe. And let's be honest: I as a graduate student pursuing a career in public affairs have yet to concern myself with the tax bracket I'm talking about and most likely, never will. Therefore, I sought out more information but found that for even those that make more than $250,000 a year, this new development is still unclear. And like so much else that's happening with the economy and in the absence of "what it all means," the uncertainty breeds anxiety and everyone braces for the worst...without really knowing how worse the worst is.

So fine. I'll skip over the need for more numerical evidence and concrete prediction and try and make it really simple: people who make more than $250,000 a year and give money will not be able to reduce their taxable income as much as they were able to before this proposal. That sounds like a disincentive to giving money - particularly for those who give a lot of money. Therefore, non-profits are worried that those who give substantial amounts of money are going to decrease amounts or stop giving.

According to an article in the Chronicle of Philanthropy, "...a significant minority (47 percent) of people in the survey reported that they would give less if they could no longer claim a deduction for their charitable gifts" and only "10 percent said their gifts would 'dramatically decrease'.” And this is if they were no longer able to claim a deduction but Obama's tax proposal just reduces the amount they can claim - right?

Though large contributions can be instrumental in balancing the budget for non-profits, what about all of the smaller contributions? Don't those add up too? Yes it takes more time to do fundraising targeted at many versus a wealthier few, but in the spirit of philanthropy, it should be just as important. Similar to President Obama's campaign strategy - all the $5 donations can add up to record-shattering fundraising.

The biggest question that will continue to be raised is: Why do people give? For tax incentives? I may have economic crisis fatigue making me a little cynical, but even I don't buy that. And given that non-profits are struggling now more than ever, isn't it possible that those who give will not only continue to give but maybe even give a little more?

In all of this uncertainty, there is one thing of which we can be certain: our new President wasn't kidding when he said we ALL will have to make sacrifices given our current economic situation. I couldn't help but remember this when I read "All these organizations are crying: 'Why are they doing this to us?'" in the Star Tribune article. They're doing it because our government is broke and taking as many steps as possible to not be broke anymore. And if some of the wealthier Americans are unable to give as much as they have in the past, then it's up to non-profits to strengthen their funding diversification and rally their less affluent funder base to rise to the task at hand. I know saying this may upset people, but it seems to me (particularly because we don't know what the impact of the tax proposal really will be) that there aren't a lot of options and this is a sacrifice that may need to be made.

The economy may not be as concrete and absolute as I thought it was. So if it is indeed as concerned with things like anxiety as it seems to be, are we really getting anywhere with prematurely drumming up more of it?


Kate Barr at Nonprofits Assistance Fund recently weighed in on this same Chronicle article. Like Ann, she warns against a knee-jerk reaction among nonprofit leaders.

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