Tag Archives: funding

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. 

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2012 Update: Social Media and Nonprofits

You’re going to want to tweet this: in response to May’s “Question of the Month,” 24% of respondents claimed that social media was the best marketing tool for nonprofits. “Word of mouth” and the organization’s own website tied for first place, each netting 29% of respondents’ votes.

http://onlinebusiness.volusion.com/articles/word-of-mouth-marketing-introduction/Not surprisingly, some nonprofits are turning to social media as a means to disseminate their missions, visions, and values. The Fourth Annual Nonprofit Social Network Benchmark Report reported that in 2012, 93% of U.S. nonprofit organizations have a presence on one or more social networking websites.

However, there are still many organizations that have no social media strategy to speak of. The answers to this month’s question reflect a number of trends we’ve noticed developing over the last few years:

  1. All nonprofits do not yet understand the power of social media.
  2. The priority placed on social media as a “connection tool” is sporadic and seems to  be used primarily by very large and very small nonprofits.
  3. Creativity relating to marketing remains very traditional. Even though everyone has a website and therefore the capability to connect with users via an interactive interface, many don’t.
  4. Impersonal marketing still dominates the landscape, and nonprofits suffer for it.

Over the last five years, many nonprofits have transitioned to using Facebook and Twitter as ways to build a donor base and market themselves to supporters. However, there is still a great deal to be learned about just how effective a tool Facebook and Twitter can be.

An astounding 98% of respondents to the Report indicated they have a presence on Facebook, offering many potential opportunities for fundraising. However, 53% of respondents said that they were NOT using Facebook for fundraising at all. 

Some organizations are opting for a modified social media fundraising approach. According to Robert Strickler, the Donor Pages Product Manager at DonorPerfect Software, an increasing amount of nonprofits are turning to what he calls a “donor driven” approach.

His firm has developed Donor Pages, an online “friend to friend portal” where an organization recruits its supporters to set up a website where they can reach out to family, friends, and colleagues and personally ask them to donate.

“Using a page like this gives ownership to the online social fundraising experience,” says Strickler. “We find that this tends to be effective because it operates on a more personal level.”

Just like fundraising through direct mail, meetings or phone calls, the same rules of stewardship are just as critical to online fundraising. Connection – genuine, heartfelt, and personal – is the key to fundraising success.

Adapted from “Social Media and Jewish Nonprofits: Missing in Action?” originally published on February 15, 2012 via eJewishPhilanthropy

21 Years…and Still Going Strong!

As The EHL Consulting Group enters our third decade as a firm, it’s encouraging to see not only how much we’ve grown, but also how much the nonprofit sector has matured and evolved as well. Both domestic and international nonprofit organizations have changed markedly since the early 1990’s . . . in terms of the numbers of agencies, the levels of sophistication, the work required to attract significant philanthropic support, and the amount of transparency that donors demand.

Helping so many different nonprofits in so many different ways has been – and continues to be – meaningful beyond expectations, and has made our work at EHL Consulting an effort that has been rewarding personally and professionally. 

As a longstanding member firm of the Giving Institute, EHL Consulting abides by a strong code of ethics that ensures our clients are treated with respect, and that their campaigns are always honest, heartfelt, and powerful. Working closely with enthusiastic and devoted men and women from all walks of life and from all parts of North America and elsewhere motivates us to keep improving our services and hopefully make a positive difference in the world at large.

We have seen the philanthropic marketplace grow and strengthen remarkably over the past 21 years. From a “slap on the back” network of unseen agreements and elite charitable circles, it has matured into a sophisticated, more scientific, accountable and increasingly transparent (though not enough) environment. Giving is now a $300+ billion dollar industry, accelerated by committed professionals with a drive to achieve substantial, measureable results.

The fact remains, however, that with all of the tools and the science, the real work is still built around relationships and connections with people. Giving is an act of passion, not a business transaction, and the connections between people are, and will always remain, the driving force.

Successful organizations know that connections are key, and always work hard to cultivate those personal bonds. Those who rely on technology and “arm’s length” communication will be forever doomed to struggle with difficulty. And besides, connecting with people is far more fun!

Our team at EHL Consulting is very optimistic about the future of philanthropy and we look forward to ever greater growth and productivity in the months and years to come. Thank you to all of our past and present clients for their hard work, enthusiasm, and dedication. For all of you who we have not worked with yet…we hope to meet you soon!

With gratitude,

Robert I. Evans, Founder & Managing Director

Avrum D. Lapin, Director & Principal

Non-Cash Giving Can Be an Important Donor Option

Reposted from eJewish Philanthropy – May 3, 2012

While the most common way to satisfy charitable commitments is with cash and appreciated securities, an often uncommon means available to donors is to utilize “stuff:” items of value that are often very attractive to collectors and which can become practical ways to satisfy philanthropic obligations.

Donors at all levels, but most notably high net worth contributors, periodically utilize non-cash giving. Art museums have received benefactions of pieces of art for decades and other types of nonprofits have welcomed real estate, especially when property was highly valued and represented an easy way for a donor to avoid costly capital gains taxes while satisfying a pledge.

A recent synagogue client received a valuable sculpture, valued at $300,000, when a member inherited the piece from a deceased relative. The donor did not want the piece and made the gift with two important stipulations: the congregation had to hold the piece for at least three years and that it is displayed prominently (requirements made for tax considerations subject to the related-use and tax exempt purpose rules of the 501(c)3 ).

Another congregation was nearly the recipient of a time-share at a Poconos resort, carrying with it a value of about $10,000. Fortunately formal Gift Acceptance policies prohibited the institution from accepting a gift of this type and the donor ultimately made cash payment for a campaign pledge instead.

Laura Linder, executive director of the Jewish Foundation of Memphis, is talking passionately these days about two gifts the Foundation has received within recent months from older Jewish philanthropists originally unaware of the power of gifting valuable collections.

The Foundation received the first gift in late 2011 when a member of the Jewish community, Susan Adler Thorp, began breaking up the estate of her late parents, Herta and Dr. Justin Hans Adler, and considered ways to deal with a Tiffany glass collection her mother had amassed. Determining that no living relatives wanted the collection, she contacted the Foundation and made arrangements through Mrs. Linder to transfer a significant portion of the collection that took more than 50 years to create.

After cataloging the objects and working in concert with one of the nation’s top auction houses, the Foundation received very significant proceeds earmarked for and added to the Herta and Justin H. Adler Philanthropic Fund, the family’s donor advised fund (DAF). Proceeds from the auction of that collection will be used in part to help fund the purchase of life-saving prescription medications for senior citizens, the Temple Israel Museum, and other charitable organizations designed to help make life better for others.

While the Adlers were avid collectors of art, they also were dedicated philanthropists, often saying that “charity is the gift you give for having a good life,” noted Mrs. Thorp. “My parents shared an eye for beauty and a love for art,” she said. “My mother’s passion was collecting Tiffany glass. Nearly everything in the collection was found as my mother searched for Tiffany glass.” All of the items in the collection were sold in a special Heritage Signature Auction of Lalique and Art Glass in New York City on November 19th. The much- anticipated live auction generated far more than the book value of the collection.

A second non-cash gift came to the Memphis Foundation earlier this year as a result of an anonymous Jewish couple preparing to downsize. The donor had passionately developed an enormous coin collection, including U.S. coins, shekels, and other pieces of varying value. The Foundation has contracted with an auction house to catalogue the coins and it is expected to go to auction in several venues later in 2012. Proceeds could exceed $500,000 and will also be used to create a DAF for an as-yet-to-be-determined set of purposes.

“During the ten years I have been at the Foundation, we have received several real estate gifts,” Laura Linder told us. “But until recently I had never even considered the power of encouraging donors to make non-cash gifts of this type or of this magnitude. This is an eye-opener for all of us at the Foundation.”

Tax implications for donors using collected items are a motivator, for sure, especially if offspring have little or no appreciation for or interest in “the stuff,” a commonly used term voiced by Bob Koo, a Palm Beach-based art and philanthropy consultant to the high net worth philanthropically-focused. “While our work is focused especially on successful individuals and families, there are certainly implications for donors of all levels,” he says.

Koo conducts educational seminars across the U.S. and has written extensively about the approaches that nonprofits might consider to attract part or all of collected possessions. Very often, he says, “things” that people have collected probably have no significant value … other than to the collector. “But in other instances, fine art of all types, books and manuscripts, coins and medals, clocks and watches, entertainment and space memorabilia, furniture, jewelry, vintage motor cars or wines and whiskeys can have large price tags. And when estate planning requires significant taxes, nonprofits can benefit significantly when they openly encourage donors to make gifts of this type … prior to their passing.”

Both Koo and Linder have told us about other circumstances where donors have talked about people who have considered charitable gifts to either satisfy current priorities or pave the way for other charitable opportunities. Both share a common recommendation to nonprofits: market the concepts actively and showcase the values of gifting collectables.

One other important consideration for nonprofits accepting non-cash gifts: carefully review your Gift Acceptance policies and update the written, formal documents so that you minimize jeopardy and are prepared with responses when potential donors inquire about gifting collectibles. Nonprofits should review such policies annually but giving beyond “conventional” methods requires careful strategies and policies.

Connecting Practices and Learning from Each Other

Reposted from eJewish Philanthropy – April 4, 2012

Three different but important conferences took place late last month and have served to connect and engage Jewish development professionals as well as donors and other committed individuals in interesting ways. One gathering reached out to Reform synagogue development professionals only, another involved Jewish foundation representatives and leaders, and the third served to engage primarily nonprofit professionals working to organize their efforts across the State of Israel. Each conference resulted in positive outcomes but took different approaches and each received different levels of visibility in the media.

Consider each of the meetings:

  • At the Jewish Funders Network (JFN) in Tel Aviv, 400 Jewish funders from across the globe gathered to address common concerns and to discuss common practices facing Jewish philanthropists.
  • At Amuta21C, 250 men and women came together to discuss challenges facing “third sector organizations in Israel,” the terminology being used to refer to nonprofit organizations.
  • At the Reform Synagogue Development Professionals (RSDP) annual meeting in Philadelphia, fundraising professionals from 19 midsized and large Reform U.S. congregations focused on best practices, innovative technology considerations, and the challenges related to attracting more philanthropic dollars from the members of Reform synagogues.

In reflecting on the purposes and importance of each gathering, we see important connections that more than justify the value of commitments of time and other precious resources. While attendees at each meeting undoubtedly used the opportunities to connect with longtime friends, colleagues, and like-minded people doing similar work, the value of sharing ideas and considering new methodologies became uppermost and is a uniform theme.

Jonny Cline, the co-organizer of Amuta21C, told us this conference “looked to address the issues of the culture of philanthropy in Israel, or lack thereof, shared responsibilities with the changing paradigm of the relationships between business and the third sector.” The program and other information can be found atAmuta21C.com, and pictures and discussions are at Facebook.com/Amuta21c.

On the heels of Amuta21C, the Jewish Funders Network (JFN) continued its focus on networking between and among some of the most connected Jewish donors. According to one prominent attendee, Jennifer Laszlo Mizrahi, “JFN is the place for people who care about smart giving in the Jewish community. Participants are outstanding human beings and the work they are doing is making the world a better place.”

She told us that one highlight at this gathering “was that there were many Israeli givers … a new trend in global giving” in the Jewish giving arena. Cline cited a panel discussion at the Amuta21 conference that featured “meet the investors” where Dame Stephanie Shirley and private philanthropist and owner of the multi-family office Philippe J. Weil, joined Sandy Cardin of the Schusterman Foundation, and Vered Raz, director of corporate responsibility for the Fishman Group. The “catch phrase” that came from the conference was a call for more and better cooperation between philanthropists and nonprofits/third sector agencies.

At the gathering of Reform synagogue development professionals, networking, too, was a major focus, with several discussions sparking dynamic discussions about planned giving, technology, and best practices. Maxine Lowy, of Temple Oheb Shalom of Baltimore and who chairs the group, termed the annual meeting as “invaluable” and looks forward to the next get-together in San Francisco in March 2013.

“Our focus was a set of discussions about what Jewish houses of worship can learn from other religious institutions … how to better be a ‘connector of people’ rather than facilitators,” she mused.

Reports about these three different conferences have been covered, partially on eJewishPhilanthropy, as well as in other blogs and media sources. Most importantly, they reflect important efforts to connect people with intersecting agendas and priorities, each with different approaches. Strengthening Jewish philanthropy has historically receded in times of economy contraction or recession, which often result in downturns in giving. We note that several other major conferences are scheduled for later in 2012 but the three we have highlighted cover Jewish perspectives that focus on Jewish priorities and nonprofits that serve the Jewish community in the US and in Israel.

Jewish communal leaders have often expressed frustration that Jewish donors were not devoting sufficient attention and resources to Jewish priorities. Perhaps the long term results will reflect more Jewish dollars directed for Jewish needs and a better understanding how to marry Jewish philanthropic desires with the work of Jewish nonprofits … in the US, Israel, and around the globe.

If you are the planner or an attendee of a forthcoming conference on Jewish philanthropy, please advise us. As Cline told us, the point of these meetings “is to facilitate the development of a professional community … that will encourage and enable professional and organizational development and that will create and facilitate a channel of communication between the professional community and the (Jewish) philanthropic world.”

Jewish Development Professionals and the Job Market

Reposted from eJewish Philanthropy – March 27, 2012

An improving U.S. economy and an upturn in charitable giving should expand the market for Jewish fundraising professionals. Is this happening … and what are the projections for the next 18 months?

“Historically, the job market for development positions is the first to see improvement after layoffs occur,” we learned from David Edell, president and cofounder of national firm DRG Executive Search Consultants, where he has been actively engaged for 25 years of search efforts with nonprofit organizations, especially Jewish organizations looking to fill higher executive positions. “We are certainly seeing a hiring rebound, especially during the last 18 months, in three specific areas of the Jewish nonprofit arena.”

“Nonprofits are looking to refill ‘frozen’ positions, they are making certain personnel changes to upgrade staffs, and they are looking to staff some new initiatives that require professional leadership and expertise,” he told us.

He confirmed that the areas that are showing the most activity in the current job market require fundraising experience in major gift donor solicitation stewardship and people comfortable in on-line giving and social media … mirroring where many successful nonprofits are placing emphasis now. “Organizations today are seeking experienced and successful professionals, people who have specific expertise and skills and who are personable and articulate. Jewish agencies are following the same paths as other nonprofit organizations in this regard,” he reiterated.

While the marketplace has once again become reasonably competitive for experienced fundraisers, salary levels have not grown substantially. Current salaries for Jewish (and non-Jewish) development personnel are competitive and are of course higher for “more seasoned and experienced men and women,” even though more people are considering careers in development after having worked in the for-profit world.

Our recent review of development positions showed us a wide range of compensation, ranging from the $45-55,000 level to as high as $250,000 and higher for very seasoned development personnel. These levels have not changed markedly during the last ten years despite competition and levels of experience.

A recent published review of nonprofit salaries by The Forward focused primarily on senior executive compensation at Jewish nonprofits across the U.S., not on development positions specifically. However, because fundraising specialists are in more demand now and as a result of a competitive philanthropic world, Edell projects some upward adjustments of salaries, especially for organizations that are competing to recruit experienced, personable, and strong professionals. “This holds for vice-president positions down to development officers,” he said, but “not especially for lower level, starting positions.”

A wide spectrum of jobs in Jewish nonprofits across the globe is often announced on a popular websiteJewishJobs.com, which was started in 2001. Founder Benjamin M. Brown, of Austin, Texas, had intended to be a college professor and while going for an advanced degree he was looking for a position in the nonprofit Jewish community and there was no jobs web site at the time. Much later, he realized that there are “distinct cycles of ups and downs in hiring” that tend to be more impacted by the calendar than the economy. JewishJobs.com, which initially focused as a clearinghouse for a wide-ranging listing of postings for Hillels, JCC’s, and Jewish Federations, today carries hundreds of job openings at any given time, with “the second best level of the best paying jobs being for development openings,” he reports. Jobs listed on this website range from nonprofits seeking teachers, computer-knowledgeable expertise, researchers, and support personnel at all levels of expertise in the Jewish communal arena, but generally the organizations that turn to this resource seek personnel at levels lower than those who reach out to the executive search firms.

Even during the most severe period of the “Great Recession,” from 2008-2010, there were Jewish nonprofits that were hiring, although the length of time required to fill open positions was longer and more competitive than what we are seeing now, both Edell and Brown agreed. What we witness today, though, places even more pressure on the job seeker, where increasing numbers of candidates are attracted to each position, especially in major cities and for the largest nonprofits.

Our review of published openings currently available illustrates that hospitals and health care are paying the highest salaries for Jewish development personnel among key sectors of the nonprofit arena, with higher education close behind. Other observations about the current – rosier – job market seem consistent with criteria used for more than the last ten or 15 years:

  • nonprofits seek dynamic, curious and engaging people who know how to take initiative and how to cultivate donors;
  • people with a functional knowledge of finance and management are being sought for development positions;
  • career-minded men and women comfortable in the major gift and planned giving arenas are in short supply.

With the job market in flux today, we envision that nonprofits seeking development personnel may need to test different methods of attracting the best and most appropriate development staff, with a greater emphasis on word-of-mouth and networking than ever before. And the networking also holds for job seekers, too, many of whom have felt frozen in current positions where they may not have seen salary increases or promotions.

We talked recently with an experienced nonprofit executive in search of a new job since early January. She has held responsible positions in synagogues and at a national Jewish nonprofit; she wishes to expand her career by focusing on the fundraising profession but she is experiencing some difficulties finding “the right job.” “I have decided to be selective about my next position,” she explained, “and I certainly want to stay within the Jewish community and to use my years of experiences to impact on a dynamic organization.” She has scheduled interviews but during her 12-week job search, no firm offers have come her way . . . as yet. She is hopeful, trying to be flexible and optimistic, but meanwhile is leaving no stone unturned. “Networking is crucial and I am certain that I will ultimately secure a job that captures my skills and expertise!”

So goes the challenging search for jobs … from the employer’s perspective as well as from the view of the job seeker. All-in-all right now it’s probably back to a solid market for the best qualified candidates, though salaries are not escalating and where mid-sized and larger organizations are watching budgets but seeking outstanding personnel.

The Impact of Tax Law Changes on Giving

Reposted from eJewish Philanthropy – March 15, 2012

Experts have long questioned the impact of tax incentives on the philanthropic motivations of American donors. We have followed projections about proposed federal tax law changes on giving to nonprofits across the United States with interest, especially prompted by the corporate tax deadline today and knowing that we are only one month away from the annual federal income tax filings for almost all Americans our thoughts focus on taxes and giving.

Our recent analysis about taxes and their impact on giving suggests unclear projections and calls into question the importance of taxes as a tax motivator for giving, especially on the decision-making processes by high net worth donors. However one looks at the questions, it becomes more than a little complicated.

As we developed our analysis, our basic observation follows that giving will go up in 2012 and down in 2013if proposed changes take place. We arrived at this projection by looking at past performances and insights from others who provide financial service guidance and advice to wealthy Jewish Americans!

Here is an overview:

The Obama Administration’s FY2013 budget proposal to alter the tax code may have absolute implications for charitable giving. Presently, United States tax law permits individuals who itemize to claim contributions for charitable organizations as legitimate deductions on their income tax returns. Under the 2010 Tax Relief Act, the United States’ existing tax rate structure was preserved for two years, keeping alive certain Bush-era tax cuts. One noteworthy aspect of the 2010 Act was that it temporarily extended a full repeal on the limitations placed on itemized deductions, thereby prolonging incentives to contributors to charitable organizations.

The tax code changes contained within the proposed FY2013 budget seek to revive the limitations placed on itemized deductions for higher income tax payers (those with incomes above $200,000 for single individuals and $250,000 for married couples filing a joint return). Included within the President’s proposal is a limit to the tax rate in which individuals and couples at the higher incomes can take itemized deductions: limits amount to a maximum of 28% (it now stands at 35%). Additionally, the changes would allow the top tax rate to increase from 35% to 39.6%, increasing the tax liability for all taxpayers with taxable income over $390,050.

According to The Center on Philanthropy at Indiana University, the proposed tax code changes would have a greater impact on the potential giving of high net worth individuals. Looking at the proposed 28% cap on itemized deductions, The Center on Philanthropy estimates a decline of .064% on charitable giving by itemizers. In combination, the two proposals are estimated to detrimentally affect household giving by tax itemizers by 2.4%. (Generally, individuals account for most charitable gifts.)

Changes in the tax code historically have had relatively modest effects on charitable giving, and it is likely that the proposed 2013 tax code changes will influence some contributions. However, we contend that tax motivations primarily determine the structure and timing of major gifts, not influencing charitable intent.

Note that the last major revisions to the tax code, in 1986, witnessed donors making significant year-end charitable gifts, often paying ahead on gifts they would have otherwise made in 1987. In fact, Giving USA reported a substantial decline in giving in 1987, primarily attributed to the 1986 tax changes. Giving levels returned to previous rates in 1988 and 1989.

We believe the President’s proposed limit of itemized deductions to a maximum of 28% could affect charitable giving. And for those potential donors who plan their giving based on the ability to reduce their tax liability through charitable deductions, this cap could potentially provide them with reduced financial incentives to give.

By increasing the tax rate from 35% to 39.6%, as proposed, those potential donors in this top marginal tax bracket would likely realize a reduction in their disposable income since a greater percentage of their income would be directed towards fulfilling their increased tax liability. We believe that with reduced disposable income, it is possible that these wealthy givers could ultimately reduce their charitable donations. It is important to reiterate that tax liability implications typically do not cause a major donor to withhold a gift. In the short term, however, as we saw in the last major change in the Reagan Administration, a major donor may reconsider the timing on donation payments.

Our discussions with two tax experts suggest some other issues, primarily impacting high net worth donors. Julie H. Zakroff, CPA, of Dresher, Pennsylvania, foresees some potentially detrimental results on the contributions from Jewish donors as a result of the proposed tax code changes. Unless they are unusually charitable or have a particularly strong affinity for an organization, her wealthy clients almost always approach charitable giving strategically. From this perspective, she believes that by increasing the tax rate to 39.6%, her wealthy clients will be less likely to donate as they will have less to draw from: a potential danger sign for Jewish nonprofits.

The proposed tax code changes will likely affect different donors in a variety of ways. Stuart Katz, CPA, a tax manager in Philadelphia, Pennsylvania, believes that generally, charitable contributions by “the six-figure married couple” are not tax motivated. They will either give or not give. By contrast, many of his higher net worth clients are motivated by tax issues. He predicts that high net worth donors will be more hesitant to increase their charitable contributions with the proposed 2013 tax code changes, rather than reduce their overall giving.

As expected, the proposals have not been received well by many nonprofits. Nathan J. Diament, the Washington, D.C. director for the Orthodox Union, was quoted as saying, “We were hoping this would not come up again this year. We asked that they not renew it, but unfortunately the request was not taken. It’s a real concern.”

Clearly, the negative implications of the proposed tax code changes on charitable giving are greater as a result of tax rate increases rather than through limitations on itemized deductions. However, we believe that the amount available for someone to give is more demonstrative of that person’s ultimate decision on whether or not to donate rather than any incentives provided by the ability to itemize deductions for charitable giving and to reduce their tax liability. Typically, the biggest donors plan their gifts strategically and are motivated to contribute regardless of the tax implications. The mission, vision or other commitments to the charity is usually motivation enough and trumps any itemized deduction opportunities. However, it is possible that mid-range donors, less driven by strategy and for whom the deduction plays a significant role in their giving, could be affected.

More often than not, changes to the overall economy directly affect household circumstances and wealth has the greatest impact on charitable giving as compared to changes in tax rates. While we hold that the proposed tax code changes may affect mega gifts rather than average donations, an improving economy is the critical factor for increasing giving across all income levels. Nonprofits should continue to effectively communicate their importance to prospective donors regardless of which way the taxing pendulum swings. Donors continue to press for improvement, growth and transparency at all levels. We predict that those nonprofits that consistently meet these demands head on, and going beyond them, can essentially transcend tax considerations.