The Impending Decline in Charitable Giving

Things are about to get difficult in the charitable world. As a direct result of the Tax Cuts and Jobs Act of 2018, charitable giving is expected to decrease by about five percent.

The new tax law enacted by Congress last fall effectively doubles the standard deduction, thereby dramatically reducing the number of taxpayers that will be able to itemize their deductions. It’s projected that 21 million families will no longer be able to claim an income tax deduction for any gifts they make to charity.

Now I’m not here to judge the worthiness of the new tax law. An argument can be made that increasing the standard deduction has benefits that outweigh the costs, but I’ll save that debate for another column. Whether you believe the change to the tax code was good or bad for America, it is now the law of the land. Those of us who care about the people served by the charities of our community need to prepare for the impact of that law.

Regardless of your political persuasion, everyone agrees that incentives matter. Because far fewer Americans will be able to itemize their deductions, the new tax law effectively increased the cost of a charitable gift by 8 percent, according to the Urban-Brookings Tax Policy Center. As a result, the Center issued a report that concluded charitable giving will plummet by as much as $20 billion, or more than 6 percent, in 2018.

Of course, many of my conservative friends argue that the Tax Policy Center is filled with liberal “bleeding hearts” that will use any argument they can to oppose tax cuts. So let’s turn instead to a study conducted by a “heartless” conservative think tank that my liberal friends loathe.

The American Enterprise Institute’s stated mission is to foster “limited government, private enterprise, individual liberty and responsibility,” among other ideas. Alan Viard, a Resident Scholar at the Institute who studies federal tax and budget policy, issued a report earlier this year which concluded, “Charitable giving will face headwinds from the new tax law in 2018. Under the new law, millions of taxpayers will no longer deduct their charitable contributions on their income tax returns, eroding a tax incentive that has long spurred individual giving.”

The conclusion of the conservative American Enterprise Institute is that charitable giving will fall by $17 billion, or about 4 percent.

Hence, the debate is not whether charitable giving will fall as a result of the new tax law. Both liberals and conservatives agree that it will. The only question is by how much. So let’s just split the difference and assume that giving will decline by about 5 percent in 2018. Unfortunately, the early returns are in and they don’t even look that good. Giving is down, and down dramatically by certain measures.

The Fundraising Effectiveness Project has been collecting hard data from the Association of Fundraising Professionals for more than a decade. Each quarter they issue a report measuring trends in the world of charity. In the first quarter of 2018, the total number of donors was down 6.3 percent as compared to the first quarter of 2017. New donors are down by 12 percent.

A critical measure for charities is the new retained donor rate. Like a business that depends on its ability to find new customers, the long-term health of a charity is linked to its ability to both attract and retain new benefactors. The new retained donor rate measures how many first-time donors from the previous year continue to give in the following year. In the first quarter of 2018, the new retained donor rate fell off a cliff, dropping by a whopping 18 percent.

And it doesn’t end there. The repeat retained donor rate is down. The recaptured donor rate is down. The overall year-to-date donor retention rate is down. Only true charitable giving nerds like me actually try to understand what all this stuff means, but it doesn’t take an expert to know that virtually every significant measure being “down” does not bode well for charities and the people they serve.

It also appears that the decline of giving is not spread equally across all nonprofit sectors. Nicholas Duquette, an economist at the University of Southern California, concludes that health care and human service organizations are experiencing the worst of the decline. He also speculates that arts organizations are not being hit as hard. Tragically, it appears that organizations serving the most vulnerable among us are bearing the brunt of this decreasing level of contributions.

While I have nothing more than experience and instinct to back it up, I believe that much of the decrease won’t arrive until 2019. Charitable giving in 2018 continues to be propped up by a disproportionately high rate of contributions from the wealthiest families. The stock market is in the middle of a record bull run. The incredible growth in investment portfolios makes it very attractive to donate highly appreciated stock right now.

The party on Wall Street must eventually come to an end and the market will correct itself. As with bear markets of the past, giving will almost certainly decline as the stock market falls.

Yet the biggest reason I believe 2019 will be even tougher is because the vast majority of Americans likely have no idea that the check they just wrote to their favorite charity won’t be deductible on their tax return. Most regular folks don’t pay a lot of attention to their taxes until spring. They’re not getting tax planning advice on an ongoing basis as wealthier families often do. Many people will receive a rude awakening when they file their taxes in the spring of 2019 and discover that their 2018 charitable gifts are not deductible. When regular people confront that reality, it almost certainly will reduce the amount they choose to contribute in 2019.

Regardless of the timing, both conservative and liberal tax policy experts have arrived at the same conclusion. Giving is declining as a direct result of the new tax law. The charities in our community – and ultimately the people they serve – should get ready because they are in for a bumpy ride ahead.

 

This article was written by Bret Bicoy, President and CEO of the Door County Comunity Foundation, and originally appeared in the Peninsula Pulse.

SUSTAINABILITY GRANT AWARDED TO BELGIAN HERITAGE FOUNDATION

The Door County Community Foundation recently presented a Sustainability Grant to the Namur Belgian Heritage Foundation from the Clifford and Clara Herlache Foundation. This grant is being used to purchase and install an audio visual system.

The Belgian Heritage Center is in the process of completing it’s series of 20 individual historic interview videos documenting the recollections of those who heard stories from their parents, and other family members from the earliest days of the Belgian Settlement The system this grant supports will allow volunteers at the Center to make group presentations to tour groups, school children, and others.

“The Belgian Heritage Center is the only historical center dedicated to the collection, safe keeping, and display of the Belgian Settlement history in the area, says Mark Jinkins, Board Member of the Community Foundation. “We’re honored to be able to help preserve Door County history.”

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Pictured, from left to right are Joe Alexander, of the Belgian Heritage Center and Mark Jinkins Board Member of the Door County Community Foundation.  

The Door County Community Foundation’s Sustainability Grants program distributes grant dollars from funds such as the Arts Fund, Children & Youth Fund, Green Fund, Health & Human Needs Fund, Education Fund, Historic Preservation Fund, Healthy Water Fund, and Women’s Fund.

For more information about the Community Foundation’s services and various grant programs, please visit www.GiveDoorCounty.org.

The Door County Community Foundation, Inc. is a collection of separate charitable funds set up by individuals, families, non-profit organizations, private foundations and businesses that are managed, invested and disbursed for the current and future good of Door County.  The Foundation was launched in 1999 and currently administers more than $20 million in charitable assets.

 

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Community Foundation Awards Sustainability Grant to HELP of Door County

The Door County Community Foundation has HELP of Door County a Sustainability Grant from the Ruth & Hartley Barker Memorial Fund and the Bernice & Gene Hawkins Charitable Fund. This grant supports HELP of Door County’s Hotline Program.

HELP of Door County provides services and programs throughout the Door County Peninsula to victims of domestic abuse. They work to improve the well-being and dignity of individuals, families, and intimate relationships. The hotline provides free, confidential services to domestic violence victims at any time and any place in Door County.

“Last year, HELP of Door County fielded 588 hotline calls,” said Kacie Mueller, Community Relations Officer of the Door County Community Foundation. “No two domestic violence relationships look exactly alike. The highly trained advocates at HELP deal with unique situations every time they receive a call with the primary goal of ensuring domestic violence victims are safe. We are hopeful these funds will help achieve that goal.”

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Pictured, from left to right are Kacie Mueller, Community Relations Officer of the Door County Community Foundation, and Steve Vickman, Executive Director of HELP of Door County. 

HELP of Door County provides services and programs throughout the Door County Peninsula to victims of domestic abuse. HELP works to improve the well-being and dignity of individuals, families, and intimate relationships. They do this by supporting and enhancing their strengths to reduce the incidence of violence and conflict within their relationships. HELP does not provide counseling but they are here to listen without judgment, support without blaming, and empower victims through advocacy and information. All victim services are free and confidential. For more information about HELP of Door County, please call 920-743-8785 or visit http://www.helpofdoorcounty.org

The Door County Community Foundation’s Sustainability Grants program distributes grant dollars from funds such as the Arts Fund, Children & Youth Fund, Green Fund, Health & Human Needs Fund, Education Fund, Historic Preservation Fund, Healthy Water Fund, and Women’s Fund.

For more information about the Community Foundation’s services and various grant programs, please visit http://www.GiveDoorCounty.org.

The Door County Community Foundation, Inc. is a collection of separate charitable funds set up by individuals, families, non-profit organizations, private foundations and businesses that are managed, invested and disbursed for the current and future good of Door County. The Foundation was launched in 1999 and currently administers more than $20 million in charitable assets.

A New Study on Giving in Retirement

Working with retirees is just part of everyday life for those of us whose business is charity in Door County. Yet there is surprisingly little research on philanthropy in the retirement years. Thankfully, a new study was just released in July that for the first time looked at how charitable giving patterns change as people transition from their careers into retirement.

How Women and Men Give Around Retirement was researched and written by the Women’s Philanthropy Institute, a part of the Indiana University Lilly Family School of Philanthropy. Within the study are several conclusions with implications for Door County’s charitable community.

One of the most heartening things in the research is how robust people’s commitment is to the charities they care about, even as their financial situation changes. Not surprisingly, when someone retires, household consumption tends to significantly decline. Spending on housing, transportation and education tends to fall dramatically from the years just prior to retirement to those immediately after retiring. Food spending also declines, although more modestly. Overall, total household spending drops 16 percent on average in the five years immediately before and after retirement. Thankfully, charitable giving is an exception.

In contrast to the drop in overall consumption, charitable giving tends to hold fairly steady during the transition into retirement. This is equally true whether you measure it in terms of the average size of a charitable gift or the percentage of total household income that is donated to charity.

The study also found that many differences in gender and marital status tend to continue into retirement. Numerous studies have shown that single women are more likely to give than single men and they generally give higher amounts than men. Similarly, married couples and single women are consistently more likely to give than single men, even when adjusting for other factors. These same patterns hold true into the retirement years.

One of the more interesting observations among retirees is that single retired men demonstrate far greater volatility in their giving. The study notes that the trend line for giving by single retired men fluctuates dramatically, both in terms of likelihood to give and the amount that is ultimately donated. Women and married couples are far more stable in their giving patterns.

Were we to view the data purely as a market analysis, then charities might reasonably conclude that retired single men present the greatest new market opportunity for those raising money for a special campaign such as a new building or to create an endowment fund. The study notes that retired men “tend to be more transactional in their giving, often responding to personal appeals and not engaging as deeply with their organizations they support.” As a group, retired men have been shown to be more volatile in their giving, but research also demonstrates that they can be motivated to make significant charitable gifts with the right approach. The data shows that retired single men may not require a long, deep relationship with a charity before they make a gift. Presumably some combination of a good idea and/or the right fundraising volunteer is sufficient to motivate single retired men to donate. This means that retired single men with financial capacity are a good new market opportunity for Door County’s charities to approach with a request for single, one-time commitment that is the very definition of a special campaign.

The data in the study also supports the idea that a different kind of approach is necessary when asking for charitable gifts from single women and couples who are retired.

Single women are the only demographic studied whose level of volunteerism goes up in the first year after retirement. In fact, it goes up dramatically. Volunteerism among couples declines slightly immediately after retirement but rebounds quickly in the next few years. Eventually retired couples will volunteer their time at a rate higher than during their working years. Single men, on the other hand, are far less likely to volunteer during their retirement.

This difference should cause charities to approach retired single women and couples differently than single men. Rather than the transactional approach of asking single men to give to a special campaign, Door County’s charities would do well to develop vibrant volunteer programs that engage retired single women and couples in their work. The study notes that “women’s deeper engagement and loyalty to the causes they support may lead to more sustained giving, which helps explain their more stable levels of giving around retirement.” The study notes that retired single women and couples tend to be far more consistent in the organizations they support. These kinds of donors provide for the regular and dependable income stream that charities need to thrive.

Finally, when you think about retirees and charitable giving, inevitably the conversation turns to a gift in an estate plan. What the study found, however, is that if charity waits to discuss planned giving until a person retires, they’ve often missed the boat.

“Retirement is a process,” notes the study. “People think about estate and bequest gifts many years before they retire.” The data shows that the idea to make a planned gift typically begins around ages 45 to 50. Although it may be a decade or more before a charitable donation is actually incorporated into an estate plan, potential donors are ready to have a conversation about an estate gift many years before most charities even think to make the suggestion.

Of course, as fascinating as this study is, it speaks to what most people do. We all can think of exceptions to the rule. Regardless, it would behoove the charities of Door County to try to better understand the motivations and actions of those people upon whose generosity the charitable work depends.

This article, written by President and CEO of the Community Foundation Bret Bicoy, originally appeared in the Peninsula Pulse.

Women’s Fund Awards Sustainability Grant to the Door County YMCA

The Women’s Fund of Door County has awarded the Door County YMCA a Sustainability Grant. This grant will allow 5th grade girls to participate in Girls Night Out.

Girls Night Out is a 9-week program created and designed to help 5th grade girls successfully navigate what can be a challenging phase in their lives and make it a positive and healthy experience. Participants were involved in hands-on activities that helped them to understand and make their way through the social, emotional, and physical challenges that lie before them, as well as explore the benefits of healthy choices that include nutrition, physical activity, and building emotional resiliency.

“As in every community, there is a need to help girls understand and prepare for the changes that occur within themselves emotionally, and around them, while transitioning into their teenage year,” said Jennifer Moeller, Chair of the Women’s Fund of Door County. “We are pleased to provide this grant for Girls Night Out so the YMCA can effectively tackle the major changes and issues that 5th-grade girls face in daily life.”

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Pictured from left to right are April Clark Human Resources and Financial Development Associate of the Door County YMCA and Jennifer Moeller, Chair of the Women’s Fund of Door County and Sarah Gavin and Tyler Powell of the YMCA.

The mission of the Door County YMCA is to put Christian principles into practice through programs that build healthy spirit, mind and body for all through program centers located in Fish Creek and Sturgeon Bay.  The Door County YMCA touches the lives of more than 7,800 individuals annually and seeks to strengthen the foundation of our community by providing people of all ages with the resources and solutions for healthy living, youth development and social responsibility.

For more information regarding the Door County YMCA, please call (920) 743-4949 or visit www.doorcountyymca.org.

The Door County Community Foundation’s Sustainability Grants program distributes grant dollars from funds such as the Arts Fund, Children & Youth Fund, Green Fund, Health & Human Needs Fund, Education Fund, Historic Preservation Fund, Healthy Water Fund, and the Women’s Fund.

For more information about the Community Foundation’s services and various grant programs, please visit www.GiveDoorCounty.org.

The Door County Community Foundation, Inc. is a collection of separate charitable funds set up by individuals, families, non-profit organizations, private foundations and businesses that are managed, invested and disbursed for the current and future good of Door County.  The Foundation was launched in 1999 and currently administers $20 million in charitable assets.

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Community Foundation Awards Sustainability Grant to the Door County Medical Center Dental Clinic

The Door County Community Foundation has awarded the Door County Medical Center a Sustainability Grant from the Ruth & Hartley Barker Memorial Fund and the John and Nell Herlache Community Impact Fund. This grant supports the Door County Medical Center Dental Clinic.

The Door County Medical Center Dental Clinic provides oral health care to the youth and adults of Door and Kewaunee Counties. The clinic serves those who are on Medicaid and/or those with no dental insurance that are low-income with no dental home.

“The market value of the dental work that the Dental Clinic performed in 2017, if done in a private setting, was $1.33 million,” said Glenn Timmerman, board member of the Door County Community Foundation. “The Community Foundation is pleased to provide this grant which will help cover the costs of providing care to uninsured children and adults in our community.”

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Pictured, from left to right are Andrew Boettcher, Assistant Director of the Door County Medical Center Foundation, Glenn Timmerman, board member of the Door County Community Foundation, Tonya Fischer, Door County Dental Clinic Director, and Mike Herlache, Executive Director, Door County Medical Center Foundation.

Founded in 1975 Door County Medical Center Dental Clinic provides oral health care to the youth and adults of Door and Kewaunee Counties. The clinic serves those who are on Medicaid and/or those with no dental insurance that are low-income with no dental home.

For more information about the Door County Medical Center Foundation, please call (920) 746-1071 or visit http://www.ministryhealthy.org/DCMH/home/Foundation.org.

The Door County Community Foundation’s Sustainability Grants program distributes grant dollars from funds such as the Arts Fund, Children & Youth Fund, Green Fund, Health & Human Needs Fund, Education Fund, Historic Preservation Fund, Healthy Water Fund, and Women’s Fund.

For more information about the Community Foundation’s services and various grant programs, please visit www.GiveDoorCounty.org.

The Door County Community Foundation, Inc. is a collection of separate charitable funds set up by individuals, families, non-profit organizations, private foundations and businesses that are managed, invested and disbursed for the current and future good of Door County.  The Foundation was launched in 1999 and currently administers more than $20 million in charitable assets.

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Lessons from Montgomery and Lolly Ratajczak

Every year it’s my responsibility to say a few words at our community’s annual Celebration of Giving luncheon about why the Door County Community Foundation has selected the honoree. My assigned task is to articulate the themes from a person’s life of service in hopes that there are lessons we can draw.

DSC_0135 croppedThe 2018 Philanthropist of the Year is Lolly Ratajczak. With her husband Dave, Lolly found Door County in the 1960s and fell in love with its natural beauty. She assumed volunteer leadership positions with Birch Creek Music Performance Center, the YMCA, and the Door County String Academy. She gave of her time to countless other groups and was a founding member of the Women’s Fund of Door County.

In preparation for this year’s celebration, I found myself re-reading the works of Paul Loeb. In his famous book, Soul of a Citizen, and his subsequent anthology, The Impossible Will Take a Little While, Loeb reflects at length on the civil rights icon Rosa Parks.

Now I’m sure that most everyone knows the basics of the story of Rosa Parks. She was the 42-year-old African American woman who on Dec. 1, 1955, refused to obey an Alabama bus driver’s order that she give up her seat on the bus to a white passenger who had just gotten on the crowded vehicle.

Her refusal would inspire the Montgomery Bus Boycott. That boycott, in turn, would elevate one of its leaders, Martin Luther King, Jr., to the national stage. Eventually the Montgomery Bus Boycott would galvanize our nation and become one of the most important moments of the civil rights movement.

Of course, for those of you who know Lolly, you know that her exceptional grace and modesty is making her cringe right now by my trying to compare her to Rosa Parks. I’m not going to embarrass Lolly by trying to equate her with Rosa Parks, but I’d ask for your indulgence because there is a parallel I’d like to explore.

The common portrayal of Mrs. Parks is as an uninvolved person, sitting on the sidelines of segregation, who simply got tired of giving in and impulsively decided that she would no longer subjugate herself to the racist and obscene Jim Crow laws.

What many of us have forgotten is that Mrs. Parks was not the first person arrested for refusing to give up her seat on the bus. In fact, before Mrs. Parks was arrested in 1955, Claudette Colvin, Susie McDonald, Mary Louise Smith and Aurelia Browder were also arrested, on the same bus system, in the same city, for the same crime.

Loeb reminds us that the leaders of the NAACP created a list of specific candidates with the inner strength, and personal stories, that the NAACP believed were well suited to undertaking this very specific act of resistance. Mrs. Parks was simply the next name up on the list.

Now this truth in no way diminishes the bravery, power and historical importance of Mrs. Parks’ refusal to give up her seat. But this tremendously consequential act, and the historic changes that would follow, did not begin with Mrs. Park on that fateful day on the bus. Rather, it began with all the humble, frequently invisible, and often frustrating work, that Mrs. Parks and countless others undertook in the years before that pivotal day in history.

Mrs. Parks had been an active member of the Civil Rights Movement for many years before then. She had been the secretary of the Montgomery Chapter of the NAACP. She had even recently attended a training program on the techniques of peaceful resistance.

The stories we are fed, be it in People Magazine or on video clips on Facebook, are of individual people who come out of nowhere to take sudden and dramatic stands against the world. That leads us to the false conclusion that change occurs instantly, when one brave individual decides to take a lonely and bold stand.

Loeb writes that the myth of Mrs. Parks as a lone activist reinforces a notion that anyone who takes a committed public stand, or at least an effective one, has to be a larger-than-life figure – someone with more time, energy, courage, vision or knowledge than any normal person could ever possess. When we enshrine our heroes on pedestals, it becomes hard for us mere mortals to measure up in our eyes. We find it hard to imagine that ordinary human beings, with ordinary flaws, can do extraordinary things when we come together in service of a common purpose.

The lesson of Rosa Parks is not of the singular hero standing alone against the world. Mrs. Parks’ journey informs us that progress is the result of people inspired by a shared vision coming together to take deliberate, incremental action. And sometimes those actions can change the world.

Therein is the parallel with our friend Lolly Ratajczak. Lolly was not the first person to serve as president of the Board of Directors of the Birch Creek Music Performance Center. Nor was she the last. Yet when her turn came, the organization took a single step in the right direction. Then she helped it take another step. And then another. Eventually, those steps took Birch Creek on a journey to a place almost unrecognizable from where it began.

And Lolly would be the first to tell you that she didn’t do it alone. But it was her determination to succeed combined with the dignity with which she carries herself, and the graciousness through which she treats others, that inspired people to join her on that journey. Time and again, this has been the pattern of Lolly’s life of service here in Door County.

Lolly is an exceptional person who has unquestionably helped our community do exceptional things. But the lesson of Lolly is that within each of us is the capacity to be an exceptional person as well. If we also approach our work with determination, dignity and grace, we too might inspire others to join with us. Then perhaps, like Lolly, we can accomplish exceptional things for our beloved Door County.

This article was written by the President and CEO of the Door County Community Foundation, Bret Bicoy, and originally appeared in the Peninsula Pulse