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Do your donors think the non-profit sky is falling?

chicken little2When I hear one donor say something once, I chalk it up to something interesting. When I hear two donors say the same thing, I usually think it is an interesting occurence. However, when three or more donors express the same sentiment, I sit up . . .  take notice . . . and treat it like a potential trend.

Since the Presidential election was decided more than a month ago, I’ve more than three donors say alarming things about the state of philanthropy in this country. Here is some of what I am hearing:

  • “Congress and the President won’t agree on the fiscal cliff negotiations. We’re going off the fiscal cliff, and charitable contributions will go down.”
  • “Obama wants to get rid of people’s charitable tax deductions, and this will result in a reduction in donations.”
  • “The Bush tax cuts on the wealthiest Americans will be allowed to expire, which means wealthy Americans will stop giving to charities.”
  • “Congress and the President will go off of the fiscal cliff. Everyone’s taxes will go up. Another recession will surely result, and charitable giving will dip as a result.”

I am not exaggerating. There are a number of donors and non-profit board members with whom I have spoken in the last month that think the sky is falling.

At first, I thought this talk was the result of Republican donors being unhappy about a Obama re-election. However, I’m beginning to re-think this original opinion. I honestly think people are getting scared.

There are multiple reasons for this hysteria and probably include a 24-hour media cycle, political rhetoric, etc. Regardless, the ‘WHY’ doesn’t matter . . . non-profit professionals need to focus on ‘WHAT’ they should be doing and saying.

chicken little1While fear is irrational, it definitely impacts human behavior. I believe most students learn this in Psychology 101. So, if people “think” the sky is falling, it is falling regardless of the facts.

You can passively sit by and let your donors and board members whip themselves into a frenzy, or you can be a responsible non-profit professional and do something about it.

I have always believed that an “ounce of prevention is worth a pound of cure”. In this instance, I believe that good non-profit professionals will inject a calm and reassuring voice into any local discussion being had with board members or donors.

Of course, being calm and reassuring is easier said than done, and it requires a firm grasp of facts. Unfortunately, the facts shift and change and are subject to interpretation. However, I was very encouraged when I saw that BoardSource is hosting a webinar featuring Tim Delaney, CEO of the National Council of Nonprofits. He will speak to the issue of fiscal cliff, capping deductions, etc.


Once you get some of the facts about the issues, you should feel more comfortable participating in these type of conversations when they come up with donors and volunteers.

chicken little3Here are a few quick tips you may want to remember when jumping into these discussions:

  • Don’t express partisan opinions. Stick with the facts about what is being discussed. I encourage steering clear of expressing an opinion on what you think the impact will be. Put the crystal ball away!
  • Be reassuring and express confidence that these things always work themselves out in the end. History proves this to be true time-and-time-again.
  • Remind donors that tax considerations are rarely a motivating factor in most people’s charitable decisions. Donors give to good causes with good missions. Tax considerations (if they are even in the equation) are frequently a final factor and contribute to size of gift and rarely on whether or not to give.
  • No one can predict the future, and getting all worked up about something we can’t control is an exercise in futility. All we can control is our own actions .(e.g. who do we ask now, for how much as we asking, when are we asking, etc). Let’s remain focused so we don’t accidentally get swept up in something that doesn’t yet exist.

Are you hearing some of your donors and board members wring their hands over this policy debate in Washington D.C.? If so, what are you doing to make sure your year-end giving isn’t negatively impacts? Are you doing anything at all? Are you remaining silent?

If you end up attending the BoardSource webinar today, please circle back and share a few of the details in the comment box below. If you can’t attend, please weigh-in with your thoughts on the the questions I just posed or any of the ideas I just expressed.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC!/eanderson847

NIMBY meets Ant and Grasshopper

Since yesterday’s post I have “cooled off” just a little bit about the charitable tax deduction debate going on in Congress and at the White House. One of my dearest friends — Fred — emailed me last night suggesting the tone in yesterday’s post might have been a little over the top (and I thank Fred for watching my back). Nevertheless, I am not done blogging about this subject, but I will try to do better with my tone today.

As someone who received his formal education in “urban planning,” I learned at a very early age the meaning of the word “NIMBY“. Of course, it is an acronym that stands for “Not In My BackYard and has been stretched to also include people who advocate a policy position but oppose implementation of it in a manner that would affect them or their cause.

Looking at our nation’s fiscal and budgetary situations, I think almost everyone sees that something needs to be done (e.g. spending cuts, tax increases, closing loopholes, etc). Unfortunately, it seems like everyone wants this done in a way where others will be asked to sacrifice while their budget allocations or special tax breaks or loopholes are preserved.

Isn’t this exactly what fundraising professionals are saying to Congress when they lobby to save the charitable tax deduction?

Additionally, as I said yesterday, we (the resource development community) need to keep this issue in perspective. President Obama and the Congress are not proposing the elimination of the deduction. As I understand it, the proposal is simply to cap the deduction at 28%, which means that only those Americans in the 33% and 35% tax brackets will be affected.

While I see both sides of this debate very clearly (and AFP does make some good points which I agree with regarding wealthier donors and tax implications), I think my biggest objections are three-fold:

  1. there is far too much rhetoric and very few facts in this debate,
  2. “Shared” sacrifice is the only our nation will find its way out of this current situation and the non-profit community has more credibility than stooping to NIMBY-like arguments, and
  3. Shouldn’t AFP focus more time helping non-profits prepare for the inevitable day where government grants and preferential tax loopholes dry up?

I also find myself torn on the issue of “subsidizing” other people’s charitable contributions to their churches and social service non-profits. After all, isn’t that really what is happening when Uncle Sam” offered “Joe Q. Public” a tax deduction on anything?

Regardless of whether the end is near or not, there are things I believe non-profit organizations should start doing today in preparation for what I see as an inevitable decision our politicians will need to make one day. Here are just a few of my ideas:

  • Invest time, energy and money in getting better prospect identification and cultivation
  • Invest time, energy and money in development and use of an awesome case for support
  • Invest time, energy and money in donor stewardship
  • Invest time, energy and money in development of outcomes measurement and an impact assessment model
  • Double down on board development efforts to recruit new board volunteers with dynamic social networks who are enthusiastic fundraisers
  • Invest time, energy and money in marketing efforts (e.g. building a marketing committee, creating online social networks, improving transparency via your website, etc)

Let me leave you with this thought … challenges like this one are NOT new. In fact, they are as old as Aesop’s Fable about “The Ant and the Grasshopper”. Take a few minutes to watch this YouTube video and refresh your memory. After you do so, please take a moment to reflect on these questions: “What should you do to prepare?” and “What can I start doing today to begin preparing?”

I encourage you to share some of your thoughts using the comment box for this blog. We can all learn from each other!

Here is to your health!

Erik Anderson
Owner, The Healthy Non-Profit LLC!/eanderson847

Romper Room time for fundraisers

“Romper bomper stomper boo! Tell me, tell me, tell me do. Magic mirror tell me today …”

Ah, now that brings back childhood memories of watching “Romper Room“. Sadly, I was always afraid of that last bit to end the show where the host recites those magic words and allegedly turn our TV set into a two-way window where she could see things that in reality really weren’t there. It was kind of like a magic crystal ball.

After reading an article on PNNOnline this morning about the future of the charitable tax deduction as part of the debt ceiling and budget debates, I’ve come to the conclusion that it is “Romper Room” time for the philanthropy community. Why? Quite simply, I believe everyone is pulling out their magic mirrors, trying to predict what “might happen” and how that “might impact” charitable giving, and weighing in with an opinion wrapped in rhetoric. Here is just one example from the PNNOnline article:

“The White House and Congress must understand that limiting the value of itemized deductions for charitable contributions will dramatically affect the charitable sector and those it serves,” said Andrew Watt, FInstF, president and CEO of AFP.

OMG … it is Godzilla! Run!

Additionally, AFP asked its members what they thought using a “web poll,” and more than half said they thought a reduction in the charitable deduction would result in a 10-percent drop in charitable contributions to their charities.

Seriously?!? There is no way that anyone including the President & CEO of the Association of Fundraising Professionals (AFP) can make statements with that much certainty. I need everyone to take a deep breath and consider the following:

  • It is a web poll … how scientific can that be?
  • Do we need to talk about the shortcomings of survey data? If so, there are two great reading assignments for you — assignment #1 and assignment #2. A piece of advice … this is bedtime reading. Zzzzzzzzz! Please trust me when I say the results are garbage.
  • Very few people make charitable contributions because of the tax code. They give because it makes them happy, they want to change the world around them, the right person just so happened to ask them, and the list goes on and on. Sandra Sims at Step By Step Fundraising did a nice job make this point in her blog on what motivates people to give.
  • While it is impossible to say with certainty, a large number of Americans don’t itemize their taxes and receive no tax benefit for making their charitable contributions.
  • There have been many “scientific studies” done on the effects of tax policy on philanthropic giving. Needless to say, their conclusions are all wishy-washy because there are too many factors to consider including: the state of the economy, income, perceived personal wealth, state of mind (e.g. consumer confidence), quality and degree of training of the non-profit volunteer solicitor, etc etc etc. Click here to read an academic paper by Lise Vesterlund based on the scientific method and psychology. Go ahead and try to read all 70-pages objectively. If you were being honest and fair, you’d agree that the conclusions should best be summed up by saying “I dunno!”

The fact of the matter is that the tax rates bounced all over the place in the 1980s and there didn’t seem to be much of a noticeable change in charitable giving.

So, if you are one of my fellow resource development colleagues running around like Chicken Little, I beg you to please sit down, take a pill and put down your Romper Room magic mirrors. There is no need for hysteria, and let’s stop trying to use science to bolster opinions because the reality is that human behavior is too difficult to explain by using “web polls” and rhetoric.

Tomorrow, I will continue this discussion and even try to play devil’s advocate. In the meantime, please use the comment box and weigh-in with you thoughts on this subject. Am I being too dismissive? Have you seen more convincing evidence? Do you have a strong opinion on how your non-profit might be affected? If so, what do you base it on?

Here is to your health!

Erik Anderson
Owner, The Healthy Non-Profit LLC!/eanderson847
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