Nine Months That Changed Everything

As a father of six children, I have personally experienced the monumental difference that nine months can make in a life. Apparently, that applies to charities as well. During the last three fiscal quarters, the leadership of the Boys and Girls Club of Door County has made dramatic changes and is successfully addressing its financial crisis.

Quite simply, the organization had become a victim of its own success. After opening the David G. Hatch Center in 2016, it had more activity space than ever before. With good hearts and the right spirit, its leadership threw the doors wide open and invited in every child who needed its resources.

Unlike a business in which new customers translate into more profits, whenever a new group of kids walks through the door, the Boys and Girls Club loses more money. Most of its children could never afford to pay the full cost of the services they receive, yet the organization must always maintain a ratio of at least one adult for every 15 kids. More kids mean greater costs but almost no new revenue. It’s a nonprofit precisely because there is no profit to be made.

Throughout 2018, the Boys and Girls Club was running an absolutely alarming deficit. It had to borrow money to meet its current obligations and was having difficulty covering payroll. That’s when its leadership came to visit us at the Door County Community Foundation.

After a painstakingly thorough evaluation of the Boys and Girls Club’s financial crisis and proposed workout plan, we at the Community Foundation felt confident enough to encourage the people of Door County to join us in giving the organization a second chance to thrive. We sent letters to our friends, and I wrote the column “Don’t You Quit.” I’m pleased to report that not only did our community give the Boys and Girls Club that second chance, but it’s now well on its way to thriving.

Since the crisis began, the Community Foundation has been receiving regular strategic and financial reports and has met with the organization’s leadership on several occasions. Our most recent meeting was just a few days ago with CEO Julie Davis, CFO Cindy Neuville, and board member Erich Pfeifer. I’m pleased to report that things are trending in a very optimistic direction.

On the revenue side of the ledger, consultants were brought in to help implement proven strategies to acquire new donors, and a stewardship committee was formed to better engage current donors. As a result, the number of donors increased by 29 percent. Nationally, the average donor-retention rate (the percentage of last year’s donors who gave again this year) typically hovers around 45 percent. The Boys and Girls Club’s rate is 61 percent.

On the expense side, the organization has consolidated operations and found efficiencies in how it deploys staff. As a result, payroll was cut by 14 percent, and overall expenses were reduced by 17 percent compared to the fiscal year before the crisis began.

Of course, all of these changes come with a human cost. The Boys and Girls Club cannot afford to serve the same number of children that it did a year ago. Then again, the reality is that it couldn’t afford to serve all those kids last year either. The only way it was possible then was to borrow money and go into debt.

Gratefully, because of our community’s generosity over the last few months, the organization is now completely debt free.

The fundamental causes of this financial crisis were overly optimistic revenue assumptions combined with exceedingly aggressive program expansion. Although that was a strategic mistake and a long-term recipe for disaster, we should pause to celebrate the spirit behind those decisions.

Within the leaders of our Boys and Girls Club is the compelling and sometimes overwhelming desire to help every child who needs them. That’s the kind of spirit we want in those who run the organization. Yet we also need the leadership of human-service organizations to make sure that their hearts remain in balance with their heads. Although we may want to rescue everyone who’s fallen into the water, we must also ensure that we aren’t so overwhelmed that we end up sinking the boat.

The Boys and Girls Club has used our community’s recent generosity wisely. It has plans for future growth, but those plans are realistic and appropriate, and they should be implemented at a far more measured pace. Thankfully, it appears that the Boys and Girls Club of Door County will be here for our children for many years to come.

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

Charity, with a Glass of Wine

At the Door County Community Foundation, we recently learned some really interesting things about each other. One of our board members wrote a musical. A member of our professional staff used to dress up as Clifford the Big Red Dog at public events for PBS. The husband of a board member wrote the definitive history of U.S. Senator Philip Hart, for whom the Hart Senate Office Building is named. A member of our team even learned that the “scary” board member is actually “really funny” and a “nice person.”

These are just a few of the things we learned about each other when we and our spouses gathered outside the office to spend some time together as colleagues, volunteers and friends. Gather a group of people who share a common mission, add a few glasses of wine, mix in a couple of plates of hors d’oeuvres and suddenly you find yourself enjoying each other in a whole new and refreshing way.

According to the respected nonprofit governance experts at BoardSource, the leadership of a charity is two and a half times more likely to work as a collaborative team when it deliberately creates social opportunities. In corporations across America, there are many examples of exercises and activities that companies use to build stronger teams, yet too often team building is seen as a wasteful expense in the nonprofit world. A common criticism is that we should be spending our money on our charitable mission, not on an evening of wine and cheese for our nonprofit board and professional staff.

Private companies, however, invest enormous amounts of time and money to build stronger interpersonal bonds among their people precisely because this investment delivers business value to the organization. A strong team fosters good communication and better problem-solving. It encourages camaraderie, which is essential for a motivated workplace. It leads to more satisfied employees, which promotes better customer relations and lower employee turnover. In essence, a strong team creates a synergy where the whole is greater than the sum of the individual parts. Businesses invest in socializing and team-building activities precisely because they’re good for business.

As important as team building is in the for-profit world, it’s arguably even more important for the charities of our community for one simple reason: Private companies don’t need volunteers to get their work done.

At a for-profit business, employees tend to interact with each other on a frequent, if not daily basis. Although companies still choose to invest in team-building activities to foster strong interpersonal relations, those bonds are reinforced organically through the daily interactions among co-workers.

At a charity, those regular interactions can be more rare. Even the most involved volunteers might interact with each other and the professional staff only a few times a month. Some boards of directors, like that of the Community Foundation, meet as a whole only four times a year. If we are not deliberate in building vibrant interpersonal bonds among the volunteer board and professional staff, they might never develop at all.

Further, although building a strong sense of teamwork at a charity has all of the same benefits that you’d find in a for-profit business, there is the added benefit to nonprofits of increased volunteer retention. At a corporation, everyone is paid to be there. A charity’s professional staff is obviously paid as well, but by definition, its volunteers are not. If volunteer board members do not find their service experience rewarding or do not appreciate their time spent with colleagues, they will likely resign before their work is truly done.

A board member who reports a strong sense of teamwork among colleagues and the professional staff is almost four times more likely to fully serve out the board term.

BoardSource notes that social opportunities are a critical ingredient in a charity’s organizational culture and overall board satisfaction. Being intentional about creating strong interpersonal bonds makes a real difference in how the board functions, how it interacts with the professional staff and organizational effectiveness as a whole, yet fewer than half of charities report investing in social activities that promote a sense of teamwork.

So gather together your board, professional staff and their spouses and partners over a glass of wine and some hors d’oeuvres. If don’t know how, invite me, and I’ll gladly show you how to have a nice time with your friends and colleagues – especially if it’s a good glass of wine.


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

Principles of Collaboration

Collaboration has become one of the trendiest ideas in the nonprofit world. Donors and grantmakers are increasingly demanding it, and the charities are responding accordingly. Generally speaking, this is a good thing.

A strong and robust collaborative partnership leads to greater organizational efficiencies and increased effectiveness, and it can accelerate the speed of social and/or systems change. The problem is that too many efforts at collaboration are anything but strong and robust. Donors and grantmakers have put so much pressure on charities to collaborate that partnerships are now being formed simply to relieve that pressure.

The problem is that although a good collaborative partnership can lead to better outcomes, a bad collaboration isn’t just benign: A poorly constructed collaboration can actually hinder a community’s ability to achieve its goals.

Morten Hansen, a management professor at the University of California-Berkeley, conducted a comprehensive study on collaborations. He spent 15 years examining how different teams work with each other to achieve a shared goal. Hansen said that the greatest surprise in his research was the realization that bad collaboration can lead to far worse outcomes than if the partners simply chose not to collaborate at all.

For example, poorly structured partnerships between project teams can overwhelm schedules with unproductive meetings, distract the teams from focusing on their core missions and create cloudy lines of accountability that actually result in less work getting done. A poorly conceived collaboration can make things worse than if the partners had simply tried to work by themselves and failed to achieve their own goal. There is significant research that suggests society is often better off if two organizations choose to go their own way rather than work together in a poorly constructed partnership.

Of course, just as a bad marriage should not cause a person to give up on the promise of love, the possibility of a bad partnership is not a good reason for an organization to decline to collaborate. The rewards of a good partnership are simply too great to ignore.

In my many years of working in the world of philanthropy, I’ve helped facilitate numerous collaborations between charities. One thing has become clear to me: Similar to a marriage, perhaps 80 percent of the likelihood of a collaboration’s success can be traced directly to selecting the right partner in the first place. The challenge is to identify what constitutes the “right” partner.

In the case of my marriage, I chose someone incredibly determined, remarkably kind and absolutely gorgeous. Of course, if you’ve met my lovely wife, Cari, you’re laughing out loud right now at the idea that I chose her. It was sheer dumb luck that my “collaborative partner” chose me. Thankfully, charities don’t have to search for a four-leaf clover before building a collaboration. There are three principles an organization can rely on to be more deliberate when selecting a collaborative partner.

First, the partners need to have a shared or complementary vision. Everyone involved must have their own clear vision of what defines success for the collaborative effort, and those individual visions must be in harmony with one another. It’s easiest when that vision is the same. For instance, a public school and a church might both envision a safe place for kids to play in the neighborhood. Collaborating to build a playground is obvious and logical. The public school might use the playground on weekdays and the church only during Sunday school, but essentially they have a shared vision for the kids.

It isn’t always as obvious when organizations have different visions. Collaborations can still work between organizations with differing visions of success as long as they complement one another. For instance, a housing charity’s vision might be to ensure that all working families have safe, affordable housing. An economic-development organization’s vision could be to help local businesses thrive.

Their visions are very different, but it makes perfect sense to work together to develop a multi-family housing unit: The housing charity is all about putting working families in affordable homes, and the economic-development organization might be responding to the lack of workforce housing in the community. Although each organization exists for a very different purpose, their visions complement one another and thus make them natural collaborative partners on this particular project.

Second, the partners should have complementary capabilities. If the vision is to develop a vibrant, intergenerational program, it doesn’t make sense for a children’s charity to attempt to collaborate with another youth-serving organization because they have the same skill set: working with kids. A better partner would be an organization that serves senior citizens because it has skills and experiences that complement those of the children’s charity. In a successful collaboration, each partner brings a capability that is both unique among those sitting at the table and critical to achieving the partnership’s goal.

Third, the partners must have shared values. No matter how much two organizations’ visions are in harmony and how complementary their capabilities, there will inevitably be bumps in the road. The likelihood of two partners successfully addressing a challenge depends on their ability to work together under pressure, and how teams react when times get tough is dictated by their values. Do the organizations place a greater value on stewardship or innovation? Do they prioritize teamwork or empower the individual? Are they dedicated to a culture that is honest, open, ethical and fair; or do they focus on impact?

These are all real value statements from some of America’s largest companies. They are not necessarily mutually exclusive, but they do say a lot about what these organizations consider the “right” or “wrong” way to get something done. If you work with a partner whose values are in conflict with yours, you’ll waste a lot of time trying to resolve organizational conflicts about how you’re supposed to deal with one another. When you collaborate with a partner that shares your values, however, you can focus your energy exclusively on getting the work done.


This article, written be Door County Community Foundation President and CEO, Bret Bicoy, originally appeared in the Peninsula Pulse.

A Community Worth Fighting For

I remember June 13, 2015, very clearly. It was a typically beautiful Saturday in Door County. The sun was shining; people were smiling; and seemingly all was right with the world. I was standing in front of a party tent, looking out over the crowd, waiting to be invited to the microphone to speak. We had all gathered on Sturgeon Bay’s west side to cut a ribbon and celebrate the grand opening of our community’s new skatepark. The Door County Community Foundation had played a modest role in helping to bring this project into being, so I was asked to offer a few comments on this exciting day.

I had written out some notes of the things I wanted to say that are customary for such an occasion. The skatepark is a wonderful gift to our community. Private philanthropic dollars were used to construct this new facility, thereby allowing the county’s residents to enjoy this terrific new park at virtually no cost to the city’s taxpayers. There were people who needed to be thanked and congratulations that had to be offered to those who gave our community this amazing gift. That’s what I had intended to say.

As I stepped up to the microphone, I surveyed the crowd and was heartened to see those who were in attendance. Sturgeon Bay’s mayor and several (then) City Council members were standing off to my left, all chatting with broad smiles on their faces. To the right side of the crowd, I noticed a number of our most vocal citizens who – even their detractors would agree – are passionate and effective advocates for the causes about which they care most. They, too, were filled with glee and laughter. Everyone was in a wonderful mood.

It was at that very moment that I put my notes back in my pocket. There was something else I felt compelled to say.

I told the crowd how impressive it was that people who disagree on so many things had set aside their differences to work together to build this skatepark. From elected leaders to community activists to young people in our community, these good folks had realized that they actually do have something very important in common. Rather than let their differences on countless other issues prevent them from collaborating on any project, they chose to focus on the one project on which they could all agree.

Yet I noted that the important thing they have in common is not a desire to build a skatepark. What truly binds them together is a love for this place we call home. Each of them cares deeply about Door County and readily gives of themselves to make it better. I said that I’d seen their love and commitment to our community firsthand as I’d worked with each of them on this project. I know that they’d seen glimpses of it in each other as well.

Then I asked why so many of us seem to have overlooked the best in each other when it comes to another project just three blocks down the road.

For some context, in 2015, around the time of the grand opening of the skatepark, the city was in the midst of a fight over the use of the westside waterfront area some three blocks from the skatepark. The mayor, the former City Council and several other residents were in favor of building the proposed Sawyer Hotel on that waterfront property. In opposition were numerous vocal citizens who were arguing against what they called the “big, dumb hotel.”

As I stood at the microphone on that beautiful early summer day, I couldn’t help but point out the sad irony of it all. Several of those same people who were standing and smiling together in the crowd at the new skatepark were also demonizing each other over a hotel project just three blocks down the road.

I asked the crowd to take the lessons from this skatepark experience and apply it to their dispute over the westside waterfront. There’s nothing wrong about passionate people who care deeply for Door County talking through their differing ideas as to what’s best for our community’s future. In fact, we want a diversity of ideas because it is through a discussion of alternative futures that we will arrive at the most vibrant vision for all of Door County. However, if we choose to demonize those who disagree with our position on the current issue, we cannot have a productive conversation when confronted with the next issue.

Our most fundamental shared value is that we all love Door County, and each of us wants it to thrive. It’s that very value that inspires so many good people to get involved in public life as volunteers, activists or elected officials. Very often we find ourselves differing as to whether we should build this building, preserve this structure or enact this policy. If we begin these difficult conversations rooted in the recognition that we’re all trying to do what’s right for our community, then we can continue to be an actual community. But when we question the motives and impugn the integrity of those neighbors with whom we disagree, we rip the very fabric that binds us together.

Those comments I made four years ago seem even more poignant today. Our community is now engaged in a great debate over the future of the Teweles and Brandeis Grain Elevator. Although the Door County Community Foundation is facilitating a significant contribution from a few donor families that want to preserve the granary, the Community Foundation itself has taken no formal position on the matter except one: We ask that each of you begin the conversation by assuming that everyone involved loves this community as much as you do. We at the Community Foundation have worked on numerous projects with most of the key players in the middle of this dispute. We know from our own experience that virtually all of them are good people who are trying to do what they think is in the best interests of Door County.

At the Community Foundation, we recognize and honor the passion of those volunteers who have dedicated an enormous amount of time and money to save what they consider to be a historic treasure of Door County’s agrarian past. We also acknowledge and appreciate those who question whether it is prudent to spend a significant amount of money, private or otherwise, to save what they consider to be a dilapidated, old building. Reasonable people can disagree on what is the best vision for our shared future.

Where it becomes unreasonable is when people start posting on Facebook calling for a bonfire. It becomes unproductive when we use words like “buffoons” or “criminals” to describe honest people with whom we disagree. It becomes a tumor when we accuse others of violating their oath of office or acting unethically simply because they take a stand on an issue that is different from ours. It becomes a cancer when we assume those who oppose us must be doing so because they don’t love Door County as much as we do.

I don’t know how this dispute over the future of the granary is going to end, but I do know that eventually it will end. We’re going to have to continue to live together on this little peninsula when this fight is a distant memory. We had better take greater care in how we in this community talk with each other today, or we may find that our community of tomorrow may not be worth fighting for at all.

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

A Wisconsin Dad

On the Wednesday before Thanksgiving I embarked upon a circle tour of much of the State of Wisconsin. My lovely wife Cari had to work that day thus she dispatched me to fetch our three children from college so they’d all be home for Thanksgiving. The day began early in the morning as I set out from Door County and drove south to UW-Milwaukee to pick up our sophomore there. Next I headed west for our freshman at UW-Madison. Then I ventured northwest to grab our senior at UW-La Crosse before finally turning east and traveling across the entire state to return home to Door County. My little tour took about 11 hours.

Of course, I had to repeat the entire trip just four days later as I returned our three children to their respective colleges. I didn’t mind it in the least.

My wife likes to refer to me as a walking enigma because I often do things that are difficult to understand. For instance, I love collecting hats, yet, I rarely wear them for very long. I love the way hats look but I don’t particularly like the feeling of them on my head. Hey, I’m a conundrum.

During those two recent circle tours of the State of Wisconsin I brought along my newest favorite hat, a baseball cap that I recently purchased at the UW-Madison bookstore. Purple is my preferred color, but I enthusiastically bought this bright badger red hat because it reads “Wisconsin Dad.” As I said before, I can’t tolerate the feel of a hat on my head for very long so the cap spent most of the drive sitting on the dashboard, staring me in the face.

Those two long days in the car gave me sore shoulders and an aching neck, but it also gave me the gift of time with my children. Whenever my kids return home, they have places to go and people to see. There are younger siblings, old high school friends, grandparents and countless others all competing for their attention. But for two days isolated in my car, I had my children – these delightful young adults – all to myself. I am so grateful for that time.

Of course, the kids probably didn’t see it quite that way. They know how long the drive will be and are always in a hurry to arrive at their destination. My children, like most people their age, are focused on themselves. That is only natural. College is the time in your life that you imagine your professional future and embark on the path to realizing the vision you have for yourself. At that age you’re supposed to be thinking about yourself because you’re working hard to build the self that you want to be.

I know our children are grateful, at least intellectually, for what my wife and I do for them. They are thankful that I drive them to and from college, that their mother and I write checks for their tuition, and we deposit money into their bank accounts so they can pay their rent. But when you’re young and focused on yourself, it’s hard to viscerally appreciate a sacrifice someone else makes for you. When you’ve experienced so little, and are still so concerned with starting your life, it’s difficult to truly understand gratitude.

Even early into adulthood, I don’t think that we humans understand gratitude very well. Getting that first real job, buying a house, paying your own bills – these things are about independence. Distilled down to its essence, the quest for independence is a desire to avoid being dependent on anyone other than yourself. Inherent in gratitude is the recognition that as much as you might try to avoid it, you’ll always need to depend on other people one way or another. That’s a hard to concept to grasp when you’re young.

Gratitude is a puzzling thing. It’s not an automated response to people who’ve done something kind for you. Instead, the seeds of deep and authentic gratitude are planted in your soul when you make a sacrifice for another. It’s when you experience the burden that comes from willingly accepting the mantle of responsibility for another that you can truly appreciate when someone does the same for you.

Goodness knows you don’t need to have children to understand gratitude, but for me it was only when I became a father – when I made the explicit promise to carry my children’s burdens along with my own – that I truly felt gratitude for those who’ve helped me. It was then that I finally understood what it meant to be responsible for another and it made me deeply grateful for those in my life who accepted some responsibility for me.

That’s why I love my “Wisconsin Dad” hat. I love being a Dad. I love living on Wisconsin’s thumb. But it’s more than that. It’s a reminder that like a father, I’ve accepted the mantle of responsibility for the things I love – for my children, for my little corner of Wisconsin that is Door County. Thankfully, I’m neither unique nor alone. For my children, I joyfully share that responsibility with my wife, our family, and many friends. For Door County, there are countless other people and organizations that work even harder than I do to care for this community we love.

I’m very pleased to display my Wisconsin Dad hat.

Of course, if I could find a “Door County Dad” cap, I might actually wear that one. Especially if it’s purple.

This column, written by Door County Community Foundation President and CEO  Bret Bicot, originally appeared in the Peninsula Pulse

The Virtuous Circle of Gratitude

“We believe that we have established a rather easily implemented strategy for improving one’s level of well-being,” write Robert Emmons and Michael McCullough. “Our results provide some important findings that have not been reported in the empirical literature on happiness. There do appear to exist benefits to regularly focusing on one’s blessings.”

Using the dry and understated language of legitimate academic research, Emmons and McCullough demonstrated what poets, philosophers and the religions of the world have long known to be true. Thankfulness, counting your blessings, taking note of life’s simple pleasures – regardless of what you call it, approaching life with a spirit of gratitude has a real and deeply positive impact on our well-being.

Put more simply, we can now scientifically document that being thankful makes people happier and more resilient. It strengthens relationships, improves health and reduces stress.

Even more importantly, there is not merely a correlation between being grateful and a happier life. A causal relationship exists. Deliberately contemplating and valuing the positive things in your life has been shown to lead to higher levels of happiness and well-being.

These are just a few of the conclusions that Emmons and McCullough summarized their first extensive research on the subject in 2003, Counting Blessings Versus Burdens: An Experimental Investigation of Gratitude and Subjective Well-Being in Daily Life. In the decade and a half since its original publication, their research at the University of California – Davis and the University of Miami, respectively, continues to turn the spiritual practice of counting one’s blessings into practical actions which have been scientifically demonstrated to have a positive effect on our health and well-being.

Emmons and McCullough conclude that gratitude has two primary benefits. First, it strengthens our social ties and the natural benefits that flow from them. Second, gratitude increases one’s sense of personal worth.

One of my favorite concepts about the power of gratitude is what Emmons and McCullough refer to as the “upward spiral” that results from counting one’s blessings. “The experience of gratitude, and the actions stimulated by it, build and strengthen social bonds and friendships,” write the researchers. “Moreover, encouraging people to focus on the benefits they have received from others leads them to feel loved and cared for by others. Therefore, gratitude appears to build friendships and other social bonds. These are social resources because, in times of need, these social bonds are wellsprings to be tapped for the provision of social support.”

The remarkable simplicity of this idea is perhaps exceeded only by the profoundness of its implications. When we deliberately pause to reflect on those people who have been kind to us, we tend to be generous with others in return. That creates a virtuous circle in which generosity begets gratitude, which then results in additional generous acts. This is how relationships and friendships are built. Those friendships then become a resource upon which we can rely when faced with challenges in life.

Further, gratitude is the natural reaction of someone being kind to us. Pondering gratitude makes us feel valued and loved. Ultimately, that helps us conclude that we have value and are worthy of love.

“Gratitude, thus, is a form of love,” write Emmons and McCullough, “a consequence of an already formed attachment as well as a precipitating condition for the formation of new affectional bonds.”

Since their original research, Emmons has gone on to found the Journal of Positive Psychology and is the author of several books on the science of gratitude. He is now considered the world’s leading scientific expert on psychology of gratitude. Emmons offers several simple practices that we can all adopt to help us strengthen our own sense of gratitude.

Be deliberate. Simply making a personal vow to count your blessings every day can have a profound impact on your outlook toward life. Emmons suggests that you post a sign next to your bed so that you ask yourself “what are you grateful for today?” Make a conscious decision to spend a few minutes every day thinking about the good things in your life.

Go through the motions. If we emphasize the physical actions and behaviors that are associated with gratitude, the emotional triggers will eventually follow. In other words, Emmons suggests you smile at the people you meet. Write a thank you note when someone is kind to you. Say “thank you” regularly. Even if we’re not feeling it 100 percent of the time, going through the motions helps develop the emotional response of being truly thankful.

Write it down. The first and perhaps most effective way Emmons recommends to become more grateful is to take a few minutes every night and jot down a few of the gifts, benefits, blessings and other good things that happened to you that day. It’s easy to identify the enormous events in our life for which we are thankful. Emmons suggests that you recall the moments of gratitude you felt throughout the ordinary activities of the day.

At the center of gratitude is humility. It is the recognition that we all are the beneficiaries of other people’s generosity. It might be direct and explicit, such as when a friend offers emotional support during a time of need. It also could be indirect and distant, as with the soldier who died on a battlefield long ago to protect the freedoms we now enjoy. Every day the world is filled with countless generous acts of goodness, love and kindness. I am so deeply grateful for that.


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

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