5 Ways Charitable Giving Is Likely to Change in 2019
Humanitarian crises, natural disasters, disease outbreaks — the needs today as pressing as ever, but the way we give is evolving. Thanks to tax law and technology, along with changing consciousness and shifting social mores, philanthropy experts say there are notable shifts afoot in where, when and how Americans open their wallets to charitable causes.
Here’s what to expect in charitable giving trends in 2019.
Giving bigger donations, but less frequently
Charities and non-governmental organizations, or NGOs, are watching carefully to see if the doubling of the standard deduction under the Tax Cuts and Jobs Act of 2017 changes how — and how much — we give.
“Certainly, the NGOs are worried,” says Barbara Leopold, associate director of the Center on Philanthropy and Civil Society at the Graduate Center of the City University of New York. “There’s a great deal of worry about it on the receiving end.”
One potential change is that people could switch to giving every other or every third year instead of annually, a tactic called “bunching” that would let them itemize in their giving years to get the deduction, and take the standard deduction in other years. “At the higher level of giving, people who were giving in calculated ways — I think they’re keeping a closer watch on what effects the law will have,” Leopold says.
Using technology to mobilize support
If you feel like you’ve seen more notifications in your Facebook feed that someone is raising money for a good cause to celebrate a birthday or other milestone, you’re probably right. “We have seen a rise in crowdfunding and peer-to-peer funding,” says Una Osili, professor of economics and philanthropic studies at Indiana University’s Lilly Family School of Philanthropy.
This growth is a confluence of two trends, she says: the desire of donors to personalize their giving, and advances in technology that make giving, or asking others to give on your behalf, as easy as typing up a heartfelt message and hitting “enter.”
Osili says the trifecta of how giving is traditionally framed — as gifts of “talent, treasure or time” — is getting a fourth leg. “Now, some people are adding ‘testimony’ to that, using social media to get the word out around a cause or get people mobilized around an issue.”
Growing clout of big donors (for better or worse)
“What I call ultra-philanthropy is going to continue to expand, as it has been over the last 10 years,” says Paul Schervish, professor emeritus and retired director of the Center on Wealth and Philanthropy at Boston College.
“We’re going to continue to find that the top one-half of 1% will be giving about 30% of all the charitable dollars,” he says. Exemplified by the publicized giving of moguls like Warren Buffett, Bill Gates and Michael Bloomberg, this trend has facilitated important advances in fields such as health care and higher education.
But there is a drawback in that funding is funneled to a smaller pool of recipients or causes. This, combined with the proliferation of charities at the grassroots level, may leave smaller non-profits feeling pinched, Schervish says. “Charities at these local levels are going to feel that they’re facing greater financial challenges in their fundraising, and the reason is that the number of charities continues to expand dramatically,” he says. “The total amount of dollars can be still given to local charities and so on, but they will be divided up more.”
Investing with a social conscience
Donors today increasingly see the appeal of putting their money into a firm or a fund that will give them a return while affirming their values or supporting a cause they believe in, Osili says. “Impact investing is the notion that you can make a difference by investing in a company that has a social mission,” she says. “The idea is that the toolbox is growing.”
Millennials in particular have shown an affinity for aligning themselves — whether as customers, employees or investors — with businesses that reflect their personal value system or beliefs.
Schervish adds that donors today are looking for places that let their money do double duty. “There’s more venture philanthropy, where there is the infusion of funds for for-profit activities or non-for-profit activities that have a social outcome as one of the major consequences,” he says. “We’re going to continue to see people choosing business approaches or commercial approaches for what they deem to be important social needs.”
Making transparency a key determinant
“Women and donors of diverse backgrounds are taking more of a leadership role in the sector of philanthropy,” Osili says. One key outcome is that donors today are more proactive about asking about where their money is going and what it’s being used to do. “There’s been a lot of momentum around transparency,” Osili says.
Leopold adds that donor due diligence is a key trend driving how people contribute today. Dovetailing with the trend of donors — especially young adults — wanting more personal involvement with their chosen causes, she observes that givers are willing to do the legwork and investigate a charity’s governance policies and how donor funds are utilized, while an increasing array of online resources give them the tools they need to achieve this.
“They will take the effort to look into the place they’re giving to,” she says. “It may be looking at tax documents, looking up 990s at the Foundation Center website or just asking hard questions of people making decisions.”