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The more things change, the more they change. That’s not the adage we know, but it applies (at least in some respects) when it comes to donating to nonprofits.

Noblesse Oblige

With noblesse oblige (i.e., nobility obliges), those with economic privilege are expected to act ‘nobly’—to give generously. Programs are endowed. Hospitals get built. Noblesse oblige does something else, too: Cela réduit la facture fiscale. (Translation: It lowers the tax bill.)

But why give tax advantages just to the 1%+? “What’s good for the goose is good for the gander.” Right? Well, for years it was. But these days? Not so much. The 2017 Tax Cuts and Jobs Act increased the standard deduction significantly—to $24k for married couples. But if you take that deduction, you won’t be able to deduct charitable contributions.

That’s bad news for the nonprofit sector. “Tax law changes could be charitable giving’s Grinch,” wrote Bill Theobald recently in USAToday. During this tax cycle, he writes, the law change could cost nonprofits up to $20 billion in contributions. That’s because the number of tax filers choosing the standard deduction is expected to double in TY 2018—from a bit short of 20 million to as high as 40 million.

The tax law change comes on top of a distressing trend—household giving has been on the decline, down about 15% since 2000.

But before we conclude that things have changed dramatically, keep this in mind: the questions donors ask haven’t changed over the years: To whom should I give my money? How much should I give? And my answers to those questions haven’t changed either: ACT PRUDENTLY!

Today, the nonprofit sector is an industry, more akin to corporate America than to ‘the cause work’ that typified the sector when I started my career in the 1970s. It’s a business today, plain and simple.

I’m no cynic. I’m a realist. Today, the nonprofit sector is an industry, more akin to corporate America than to ‘the cause work’ that typified the sector when I started my career in the 1970s. It’s a business today, plain and simple.

Reagan’s tax law changes figured mightily in the metamorphosis, altering the portrait (and conception) of the commonwealth—FROM a public responsibility (funded with tax dollars) and amended by the work of charitable organizations TO less government, more (and targeted) big-giving via noblesse oblige, and a contest among hungry nonprofits for your money.

Reagan couldn’t make this happen alone. His VP and then-president, Bush I, was a major ally. Bush’s twist was to brand the shift with an appealing name, “1000 Points of Light.” What appeared to be a thumbs-up for collective responsibility was fundamentally a Conservative shtick. “You’ll need to do more because the Federal government is going to do less.” The 1000 lights of his light up a bait-and-switch.

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Flash forward. The nonprofit sector we know today is the result of a shift that began nearly forty years ago. If I hadn’t served as a board member, administrator, and consultant during that span, I couldn’t have imagined the difference between now and then.

And the difference shows. For example, how many nonprofits approached you on Giving Day, 2018? I counted the number at my end. It was 24. In the week that ran up to Giving Tuesday, I received as many inquiries about giving as I got unsolicited phone calls to get a new credit card ‘with a spectacular interest rate.’

And, let’s not kid ourselves, numbers are kept, and accounts are reckoned—with careers of money-raising solicitors on the line. Who could have imagined that Glengarry Glen Ross would come to the charitable sector?

It all adds up to this: my donating approach has evolved to ‘ACT PRUDENTLY 2.0.’

For starters, I’m not as likely today to make decisions based primarily on evaluations published in Charity Navigator. And I’m not as swayed as I used to be regarding the split between program investments and overhead. Jason Coupet and Jessica Berrett published a report recently that found nonprofits with low overhead sometimes had low impact. The opposite held, too.

My primary decision criterion? It’s my evaluation of an organization’s culture. I’m talking about deep culture—one that’s healthy and functional, and isn’t likely to turn dramatically downward with new personnel and time. I walk out of nonprofit offices with overstated facilities. I dig into records whenever I can to find salary information and learn more about how an organization is structured.

I generally prefer giving to small-scale nonprofits with local staff members who have on-the-ground experience in the work they’re overseeing. I’m skeptical about organizations with national ties because I’ve experienced too many instances of the tail wagging the dog.

I’m also sensitive to what people in my social network are saying. This year about 50% of my end-of-year giving went to organizations recommended by friends and colleagues.

While my giving rationale hasn’t changed over the years, the nonprofit sector (now industry) has, including my faith in it. That’s why my donating pattern—how much I give (less today) and where that money goes (only to a handful of organizations)—is fundamentally different from what it used to be.

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And that gives me agita.

Frank Fear