Nonprofits prep for potential drop in charitable giving

Nonprofits prepare for possible drop in charitable giving. 


Nonprofit directors are scratching their heads over provisions in the Republican tax reform package that could lead to a drop in charitable giving. Nonprofit leaders peg the potential losses anywhere from $13 to $20 billion nationwide, based on a report from Giving USA.

“People are just beginning to adjust,” says Jim White, director of the Nonprofit Association of Oregon. “The strategy I would advise nonprofits to pursue is stay calm and really get clear on your messaging.”

The vast majority of gifts, up to 90% for some nonprofits, roll in at the end of the year. (Donors like to shorten the gap between their charitable giving, and filing their tax return). As a result, much of the impact remains to be seen.

For now, many nonprofits remain in a holding pattern, as they puzzle over changes and mull different ideas and opinions about how they’ll play out.

“We’re honestly kind of stumped about how this will work,” says Max Williams, president and CEO of the Oregon Community Foundation,  “and trying not to crystal ball it too much.”

That said, nonprofits are taking a cautious approach. “Most carry a certain amount of reserves to manage a downturn,” Williams says. “ I think everybody’s going to be paying attention.”

The Oregon Museum of Science and Industry has reported steady budget growth over the past several years. Amid uncertainty over the new tax law, says Love Chantwell, vice president of development, the organization is pursuing a more conservative strategy.

“Now we’re not budgeting for that growth to continue,” he says. “We’re budgeting for things to stay flat.”

The Oregon Cultural Trust, a state agency that supports a number of cultural nonprofits throughout Oregon, is also bracing for a potential drop in donations. The organization recorded $4.9 million in 2017 donations.

“If that goes down,” says executive director Brian Rogers, “organizations will reduce FTE (full-time employment), programming will be modified and educational programs reduced.”


“We’re honestly kind of stumped about how this will work,” says Max Williams, president and CEO of the Oregon Community Foundation,  “and trying not to crystal ball it too much.”


Under the new tax law, the standard deduction rose to $24,000, removing financial incentives for some low- or middle-income households to give. Filers still get a credit for charitable gifts, but with a higher standard deduction, many will no longer itemize—the number could drop from a third of Americans to less than 5% percent, according to the Tax Policy Center. And only those who itemize can claim the credit.

That changes the power dynamics of giving. Wealthy donors will get more credit for their gifts than lower income donors, and theoretically be more inclined to give. Nonprofits that rely on a large number of donors who give up to $5,000 a year, or a couple hundred bucks here and there, could take the biggest hit.

“It’s kind of sad to see those commitments disincentivized,” says Chantwell. “This change of the tax code will put more influence in the hands of fewer larger philanthropists.”

But the wind could shift in the opposite direction. Wealthy donors are more likely than the middle-class to rely on guidance from tax advisors. That means they could be more likely to trim their gifts to take advantage of tax changes.


“It’s kind of sad to see those commitments disincentivized,” says Chantwell. “This change of the tax code will put more influence in the hands of fewer larger philanthropists.”


A second big change to tax law—the increase in the estate tax exemption—could also prompt wealthy taxpayers to cut back on donations. That’s because affluent donors sometimes increase their charitable donations in the year they sell off an estate to compensate for the tax. If they don’t need to do that, they might be less motivated to give.

If that’s the case, then nonprofits with a small concentration of wealthy patrons giving major one-time gifts — think college and medical endowments — would bear the brunt of the impact.

Some politicians and nonprofits say foundations and corporate giving could fill the gap in individual donations. But Rogers called that hope, “not necessarily a realistic goal.” Corporate and foundation giving has stayed relatively flat over the past few years.

Nonprofits might also salvage donations by helping donors develop new tax strategies. Much of that conversation has centered on “bunching” gifts—giving $10,000 every five years, for example, instead of $2,000 each year. OCT is planning seminars with CPAs and tax advisors where nonprofits can learn how to put these strategies into practice.

Creative accounting aside, it might be enough for nonprofits to redouble their mission-driven messaging. Most donors, development directors say, give because they care, not because they get a tax break.

“For the vast majority of our donors it won’t make a difference,” says Jonathan Jellen, the development director at Oregon Wild. “Most donors make the decision to support us from their hearts, not from their pocketbooks.”

That statement rings especially true in Oregon, White says. Oregonians at every socioeconomic strata give at higher rates than their counterparts in other states. Losing a tax credit won’t sever their emotional bond to their favorite causes.

“In Oregon we’re very lucky,” White says. “It’s an Oregon value to be caring and concerned.”

Correction: This article has been edited to reflect the following correction. The Oregon Cultural Trust earned $4.6 million in revenue in 2017, not $46 million, and all of it came from donations. 

Caleb Diehl

Caleb Diehl is a reporter at Oregon Business

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