Environmental Scan: Drivers of philanthropy
Tax reform
The Tax Cuts and Jobs Act of 2017 will likely affect donations to charitable organizations in 2019. Specifically, the 2017 Tax Act doubled the standard tax deduction, thereby reducing the number of households having to itemize their deductions and eliminating many tax benefits for charitable donations. Middle-class families are expected to opt for the standard deduction while wealthier taxpayers will likely continue itemizing their deductions. As a result, some predict that donors may switch from giving annually to giving every third year so they can itemize in their giving years to get the deduction. Estimates that charitable donations from individuals may decrease as much as $4 billion to $11 billion because of the increase in standard deductions and $0.9 billion to $2.1 billion because of the decrease in the marginal tax rate.4
Technology and peer-to-peer giving
Technological advances that make researching and giving easier and more convenient are likely to have a significant impact on many charitable organizations in 2019. Online donations are likely to increase as organizations make it simple to donate from mobile devices, social media platforms and their websites. Although charitable organizations will continue to directly ask individuals for a donation, many are expanding their efforts to include online social campaigns that leverage peer-to-peer giving. Other technological advancements likely to affect donations in the future include the ability for organizations to incorporate contactless payment programs and blockchain technology. Online giving grew by 12.1% over 2018-2019 with monthly automatic giving increasing by 40% over 2016 to 2017.5
Generational differences in giving
Although the trends identified above are likely to affect the decision to give in 2019, there are some meaningful differences in how different generations embrace these changes. Technological advances, the rise of alternative forms of giving, and increased opportunities to connect with peers about giving influence Millennials significantly more than Baby Boomers. Millennials are more likely to say that they give to make a meaningful difference while Boomers are likely to say that giving is part of their values. Millennials also are more likely to say their giving is more spontaneous while Boomers say their giving is more planned. As many as 49% of Millennials cite technological advances influencing their giving, compared with only 23% of Baby Boomers. This trend continues for the rise of alternative forms of giving (32% of Millennials, compared with 14% of Boomers) and increased opportunities to connect with peers about giving (30%, compared with 11%).
Twenty-nine percent of Millennials are very optimistic about philanthropy’s ability to solve the issues most important to them, compared with only 15% of Baby Boomers.2
One thing they have in common is their priorities. Both generations prioritize challenges related to health, hunger, and the environment.6
Today, foundations need to focus on impact, not just education programs or scholarships. New tech-driven trends in giving, such as the emergence of digital peer-to-peer giving and crowdfunding campaigns, make it possible to tap into high-volume, small-amount donations. To recruit new donors, organizations will need to target their messages based on the audience segment.
References:
1. Giving USA 2019: Annual report for philanthropy for 2018. Accessed Nov. 14, 2019.
2. Fidelity Charitable (2019) Future of philanthropy. Accessed Nov. 10, 2019.3. Betbeze, Philip (2018) Charitable giving to health giving to health organizations rose 7.3% last year. Health Leaders. July 11.
4. Martis & Landy/Indiana University Lilly Family School of Philanthropy (2018) The Philanthropy Outlook 2018 & 2019.
6. Nonprofit Source (2019) The ultimate list of charitable giving statistics for 2018. Accessed Nov. 10, 2019.
Note: Background research performed by Avenue M Group.
CHEST Inspiration is a collection of programmatic initiatives developed by the American College of Chest Physicians leadership and aimed at stimulating and encouraging innovation within the association. One of the components of CHEST Inspiration is the Environmental Scan, a series of articles focusing on the internal and external environmental factors that bear on success currently and in the future. See “Envisioning the Future: The CHEST Environmental Scan,” CHEST Physician, June 2019, p. 44, for an introduction to the series.
