Tag Archives: decision-making

Small Nonprofits Must Make Big Gains in 2012

Giving USA: The Annual Report on Philanthropy, issued recently by the Giving USA Foundation and its research partner, the Center on Philanthropy at Indiana University, is considered the most reliable and prominent resource for information about trends in charitable giving and announced that giving increased modestly last year.

Charitable giving in the United States increased in real dollars in 2011 by 4.0%, reflecting the second consecutive year of collective higher charitable support from individuals, corporations, foundations, and bequests, according to the annual landmark report that has tracked philanthropy for more than 50 years.

With the issue of the Report came some important highlights that reflect significant pressures facing the 1.1 million nonprofits and another 222,000 religious organizations across the U.S., including changes in behaviors by American donors of all types, especially individuals who collectively represent 88% of all giving.

The 2011 estimate of $298.42 billion represents growth from a re-stated figure of $286.91 billion given in 2010.

Giving USA: The Annual Report on Philanthropy has detailed annual estimated charitable contributions by Americans – and how they are used – since 1956, making it the longest-running study of its kind.

The Report does not show changes by any one organization or regions across the country; rather, it reflects total giving by 117 million households, approximately 12.4 million corporations, an estimated 99,000 estates, and approximately 76,000 foundations.

Among the highlights of the GUSA Report for 2011 are several critical observations that have likely relevance to small-to-medium-sized nonprofts. Most notably we observed the following trends and implications:

Giving to Religion

Giving to “houses of worship” in the U.S. remains the largest single category attracting donor support, but for the second consecutive year, this sector reflected a decline in both total dollars given and as a percentage of overall giving.

Giving to religion, making up 32% of all giving, declined by 1.7% in real dollars and 4.7% in inflation-adjusted dollars. This decline is attributed to a steady decline in religious affiliation across the country in all denominations.

Giving to International Issues

Giving by all sources to international organizations grew a remarkable 240% in current dollars, or 167.1% in inflation-adjusted dollars between 2001 and 2011, and 7.6% alone in 2011.

While there were no major international incidents in 2011 that garnered major support (excluding the Japanese tsunami), we suspect that very large donors, including the Gates Foundation, are still supporting international projects in substantial ways.

Giving to Education

Education, specifically support for colleges and universities, saw a 4.0% increase in giving, and it remains the second largest sector that donors support. Very large capital campaigns returned to college campus fundraising efforts in 2010 and 2011, and impacted this aspect of the nonprofit world.

Giving to Public-Society Benefit

Charitable support for traditional “umbrella organizations” increased by 4.0% in 2011. However, this category’s figures are clouded because once again GUSA included dollars attributed to donor advised funds as well as to United Ways and the Combined Federal Campaign into the overall calculation. Incoming funds to donor-advised fund administrators grew collectively 77% between 2010 and 2011.

Several other highlights from the GUSA 2011 Report include the following:

  1. Support for nonprofits via bequests increased 12.2% to an estimated $24.41 billion.
  2. Giving by foundations did increase 1.8%, however when adjusted for inflation giving by foundationsdeclined 1.3% in 2011.
  3. Giving by U.S. corporations and their foundations held steady at $14.55 billion.
  4. Giving to human services nonprofits rose an estimated 2.5% last year and is the third-highest amount ever recorded (behind 2008 and 2010)
  5. America’s charities face many challenges including increasing competition from more than 1.1 million nonprofits and an economy that is recovering far slower than we have witnessed following previous downturns.
  6. The “best” year for giving ever was 2007, when GUSA reported $309.76 billion in charitable support. The 2011 results are the closest that total giving has been to $300 billion since 2007.

The complete GUSA report as well as an executive summary is available now.

Adapted from an article featured on eJewishPhilanthropy.com on June 19, 2012. 

Payments in Lieu of Taxes: Necessary Evil or Unfair Imposition?

Reposted from The Giving Institute Blog – May 23, 2012

Click HERE to download a PDF of this article. 

Today’s continued economic uncertainty has prompted bold actions by local governments as they struggle to secure necessary income while faced with substantial budget shortfalls, unpredictable tax revenues and critical services in dire need of funding. In this era of municipal belt-tightening, a rapidly growing number of local officials now look at previously untapped sources of revenue: nonprofit institutions.

Since Boston’s Mayor Thomas Menino first broached the issue several years ago, other communities – small, medium, and large – have followed suit and have turned to some of the country’s most significant nonprofits to augment the current tax base.

Image Source: http://american.com

This has become an unprecedented source of revenue as well as debate, especially as questions arise around the endowments and land holdings of some of the country’s largest nonprofits, with universities, museums, hospitals and other community resources being cajoled, negotiated with and sometimes even publicly assailed in the media.

This country’s 1.5 million nonprofit organizations represent and cater to a myriad of important causes and missions, and in return, they have traditionally received immunity from real estate taxes and other taxes through their federally-designated 501(c)(3) statuses. However, the notion that charitable institutions are off-limits to the tax collector has recently been cast off.

As a result, municipalities now see an opportunity to extract some much-needed revenue from nonprofit organizations. This phenomenon has been working its way across the U.S. under creatively phrased monikers such as “voluntary contributions” and “payments in lieu of taxes (PILOT).”

We first noticed the momentum towards acceptance of this new model about 15 months ago when we developed a then-controversial op-ed piece for the Giving Institute’s blog about PILOT.  Since then we have witnessed additional municipalities placing public pressures on their largest local nonprofit institutions. Most organizations are obliging, and only a few weeks ago a precedent-setting court decision undoubtedly propelled these controversial PILOT issues into the public arena.

The Mesivta Eitz Chaim of Bobov Inc. summer camp, located on 61 picturesque acres in Pike County, Pennsylvania, is operated by the Bobov Orthodox Jewish community in Brooklyn, New York. Between June and August, the camp provides classes and lectures on Orthodox Judaism as well as some recreational activities, though the camp is primarily designed as an educational institution.

Although the camp’s dining and recreational facilities are open to the public, camp representatives were unaware of neither Pike County residents using the facilities nor Pike County or Pennsylvania residents attending the camp.  As a nonprofit organization, the camp sought an exemption from real estate taxes, but Pike County and the local school district denied the camp’s request for an exemption based on the nature of the camp and its charitable status.

The Pennsylvania Supreme Court upheld two lower court rulings against the camp’s tax exemption. In order to receive an exemption, the Court held that a claimant must meet the definition of a “purely public charity” as measured in a 1985 Pennsylvania case (Hospital Utilization Project v. Commonwealth).

In Pennsylvania, an “institution of purely public charity” advances a charitable purpose, donates or renders gratuitously a substantial portion of its services, benefits a substantial and indefinite class of persons who are legitimate subjects of charity, relieves the government of some of its burden, and operates entirely free from private profit motive.

At issue in the case was whether the camp relieved the government of some burden, since the dining and recreation facilities were open to the public and the camp’s soccer fields, located outside of the camp’s gates, were used on occasion by the public. The Court affirmed that the occasional use of recreational facilities was insufficient to relieve Pike County’s government of some of its burden and made the camp’s property taxable.

This decision has the potential to be very important, especially in this challenging economic environment when many municipalities are cash-strapped. The implications from the point of view of the nonprofit are that local governments may look to charitable organizations as revenue sources. Furthermore, nonprofits that balk at payments in lieu of taxes may face a likely possibility that the municipality could challenge its nonprofit status, and possibly revoke it.

Here’s an overview of where PILOT programs are especially active:

Boston, Massachusetts

Boston has become the clear leader in implementing PILOT programs, collecting almost $17 million annually from a variety of cultural, educational and medical institutions, with annual payments ranging from a few hundred dollars from a VFW Post to millions from hospitals and universities. In 2010, 36 nonprofits provided “voluntary tax” payments to the city.

New guidelines promulgated by Mayor Menino’s PILOT Task Force increased the number of nonprofits asked to contribute and pushed nonprofit payments up by 24%. Boston University and other large landholders have “volunteered” payments for municipal services approximating 25% of what they would pay if they were a for-profit entity.

Chicago, Illinois

Chicago has slashed critical city services amounting to $417 million. Colleges, universities and hospitals are being approached, although organizations of all sizes are affected.

One prominent example is the 20-member nonprofit Austin Green Team. Since 1989, the Austin Green Team has maintained over one dozen gardens and two greenhouses in the Austin neighborhood on Chicago’s west side, providing beauty and a sense of serenity to more than 100,000 residents. Under the Mayor’s 2012 budget, the Austin Green Team’s water service fee waiver is proposed for revocation, threatening the viability and survival of the gardens. The proposed budget plan includes eliminating fee waivers for virtually every nonprofit organization in Chicago.

Worcester, Massachusetts

In 2011, Worcester Polytechnic Institute entered into a 25-year agreement with the city to annually fund $50,000 to maintain and improve a neighboring park. WPI had already been making annual PILOT contributions of $180,000, including a 2.5% increase built in annually over the next 25 years. WPI president Dennis Berkey described the payments as strengthening the quality of the relationship between the college and the city. WPI also received assurances from the city that for the next 25 years, no additional taxes would be levied on the institution. However, a more important aspect of the relationship was the positive publicity lauded on the school for its support of the city.

Syracuse, New York

In 2011, Syracuse University began making $500,000 annual payments on a 5-year, $2.5 million pledge to the city of Syracuse. Responding to the pleas from the financially strapped city, University officials agreed to be the first nonprofit in Syracuse to make a voluntary payment after the City Council began exploring taxing some aspects of the University’s newly expanded properties. According to City Council, even as the University further shifts the burden of municipal services away from taxpayers, “It’s time for the University to kick in a little more to support these services.”

Providence, Rhode Island

Due to unprecedented financial problems, the Mayor of Providence initiated a program designed to pursue tax exempt institutions for a “failure to sacrifice.” The natural target was the city’s largest landowner, Brown University, who since 1764, was “freed and exempted from all taxes.”

Recent negotiations have yielded voluntary payments from Brown in the amount of $31.5 million over 11 years. Brown owns 200 buildings in Providence valued at over $1 billion in total, and if taxed, would pay the city $38 million annually. As Providence Mayor Angel Taveras summed it up, “every organization, including tax-exempt institutions, must share part of the burden of saving our city.”

Even with a slowly advancing economic outlook, the landscape has changed and nonprofits are unlikely to continue to benefit from their open-ended special tax exemption. With this in mind, land-owning nonprofit organizations should consider the following:

  1. Be prepared. Charitable organizations should not assume that their nonprofit status creates blanket immunity from all taxation. Houses of worship, community centers of all types, camps and other agencies owning larger parcels of land may be targeted for voluntary payments.
  1. Budget now for PILOT. Nonprofits should plan on including PILOT payments that might represent “reasonable” contributions to the municipality and tailor their budgets and programming accordingly.
  1. Get out in front of the issue and use it to your advantage. Appearing as a “good citizen” is important to nonprofits, especially those that are large landowners. Tailoring the PILOT to garner positive PR can strengthen an organization’s community image as well as possibly enable special consideration from the municipality later on. Nonprofits of all sizes should expect governments to ask them to step forward and contribute voluntary payments or pay usage fees to cover municipal services, including fire and police protection and other services.

Modern Jewish Women Donors: A New Paradigm

Reposted from eJewish Philanthropy – February 6, 2012

The Modern Jewish Woman Donor (MJWD) appears to be reshaping the face of Jewish philanthropy, especially as we found in recent conversations with several prominent Jewish women philanthropic leaders. Interviews, together with tangible results, support findings from various studies showing that women approach giving and nonprofit priorities in more focused and strategic ways than men, they often become very involved with the organizations they support, and increasingly they expect to partner with their funding recipients.

While talking with four women does not suggest major decision-making differences are afoot, we do urge non-profit organizations, as they develop their 2012 fundraising strategies, to reflect an understanding of the distinct motivators, priorities, and decision making processes of MJWD.

While Judaism certainly honors women, the evolution and new-found power of the MJWD is often overlooked as Jewish nonprofits mature and adjust to new realities in the philanthropic arena. Studies confirm that women are increasingly influential and drive decisions relating to charitable giving, and that they routinely give better and more passionately than do men. As we look around today at donors of all types and ages, we see ways that (Jewish) women address philanthropy today and see why (Jewish) women are such good donors.

Perhaps best known for more than 20 years in Jewish giving circles is the Jewish Federation system’s Lion of Judah program, where thousands of donors have become Lions of Judah, representing an annual campaign of $160 million a year and pledged endowed assets of more than $550 million. The Lion of Judah “brand,” the widely recognized jewelry identifying participating women in the Lion programs, have become signatures of committed and passionate women donors and a recognized instrument for donor development and motivation. And the success has provided focus on the networks they have nurtured, along with building financial support in communities across North America.

In reviewing the landmark 2011 Study of High Net Worth Women’s Philanthropy, conducted by the Center on Philanthropy at Indiana University and sponsored by Bank of America Merrill Lynch, we learned that motivating women and their attitudes toward giving is translated into generosity. This reality cuts across religious affiliations, and much can be learned and applied to Jewish women with diverse giving capacities. The study’s key findings included:

  • Women are strategic in their charitable giving, with 78% creating an annual giving strategy and/or budget. As a comparison, about 25% of high net worth individuals have neither a giving strategy nor budget.
  • Women often look for a deeper and more collaborative experience with the organizations they support.
  • Personal experience with a nonprofit, and the organization’s ability to communicate its impact, are important factors for women when they make their charitable giving decisions.
  • 80% of women donors expect that the nonprofit will honor their request for how the gift is used, and 45% expect that the organization will share with them the positive impact of their gift.

There are several important factors that motivate women’s giving and set them apart from their male counterparts. Most women (82%) expect to see how their gifts can make a difference in the world and how to set a good example for the next generation. Efficient use of their gifts and giving back to the community were among the top motivations for women donors.

Responses suggest, too, that women are typically more loyal to philanthropic causes, more educated and informed about philanthropic choices, and more trusting of non- profits than men. Women in giving networks are more intentional about their gifts of time and money. They have a greater awareness of the needs in the community and are likely to express more confidence in the ability of non-profits and individuals to solve societal and global problems, arising from the value that women generally place on having personal engagement with the organizations they support.

In considering these and other points, we interviewed four Jewish women philanthropists to learn about their personal philanthropy and decision making processes. Mrs. Diane Wohl, of New York, an active Jewish philanthropist for several decades, supports many organizations both individually and through her family foundation; the common thread is that she supports organizations that make a concrete difference in people’s lives and their communities and that 95% of her giving is to Jewish causes. While she and her husband work as giving partners and support each other’s priorities and activities, she directs significant philanthropy to women’s causes. She regularly evaluates the organization’s effectiveness and its sustainability when making her funding decisions and has remained loyal to causes over many decades.

Equally important to her giving are connections: Board involvement, hands-on participation in activities, and meeting the staff and recipients of the organizations’ services. She is proud that her example has positively influenced her children, who follow in their footsteps in both deeds and words and are very committed to Jewish philanthropy.

Dina Karmazin Elkins comes from a family with a long history of philanthropy and is the executive director of the Karma Foundation, which since 1996 provides grants in areas important to her and her mother, although her having an autistic child has impacted significantly the priorities they identify. When she donates to charitable causes, she, too, selects organizations where she has a personal connection, such as her synagogue and local organizations, changing the giving model she inherited from her mother’s and grandmother’s generations. Site visits and reviews of proposals and organizational documents from her grantees and applicants contribute to her knowledge of determining the value of a nonprofit organization’s work, how effectively they are advancing their mission and goals and their level of transparency.

Ms. Elkins identified generational differences in the process she and her parents use to evaluate their giving. As a 40 year old, she is more inclined to consider where an organization is heading, and always wonders if their programs and services are relevant today or are becoming dated, and if an organization should continue to be funded simply because her foundation has awarded funds to them previously.

Susan Pearlstine, 54, a fifth generation Charlestonian, joins her family in supporting a variety of local Jewish and secular causes. Jewish giving is a high priority for both their foundation and for her family members individually, particularly the stewarding of the next generation of donors in that direction … but she definitely confirms that her approach differs from that of the men in her family.

While she and her family members are often in agreement about which organizations to support, the decision making process takes on different approaches. Ms. Pearlstine considers her applicants’ willingness to partner with her and other nonprofits, to be open to different ways of creating long term sustainability, and to be transparent financially. This has clearly set a different tone, especially from the men in her family. And she is grooming her children to assume their identities and become involved in decision- making responsibilities in philanthropy.

Another philanthropist, 51, preferred to remain anonymous for this article, reflecting her charitable giving approach, too. Also coming from a long line of family members who give generously, she prioritizes her giving to local Jewish organizations, such as her synagogue, women’s organizations, and causes that nurture community and personal connections and relationships. Her philanthropic parents made significant influences on her and she looks to be a good role model for her children and guide them in their own volunteering and giving decisions, especially as they begin to give independently. Unlike her husband, she prefers to remain anonymous so that the recipient does not feel there are any strings attached or undue requirements on them as a result. For example, while her husband may wish to fund a scholarship, she is more comfortable giving funds to a school which then underwrites the scholarship.

But the power of women donors cannot be underestimated, especially with a challenge coming from Diane Wohl to other MJWD. “We all have a voice, and we can all make a difference and a lasting impact. The key is not how much you can give, but to care enough to give. All contributions matter.”