New Study Finds U.S. Nonprofits and Foundations Aligned in Concern over Tax Law

The Center for Effective Philanthropy

A majority of U.S. nonprofit and foundation leaders are concerned about a potential decrease in charitable giving in the wake of tax legislation passed by Congress late last year, a new study released today by the Center for Effective Philanthropy (CEP) reveals. The report, titled Bracing for a Downturn: Nonprofits, Charitable Deduction Worries, and How Foundations Can Help, also finds that nonprofits are looking to funders to step up in this time of uncertainty by providing direct support to affected nonprofits and by promoting the importance of the nonprofit sector and its work.

Findings of the study are based on survey responses from 170 nonprofit CEOs and 187 foundation staff who hold the highest level of responsibility for programmatic work at U.S. private and community foundations giving more than $5 million annually. Survey responses were collected in January and February 2018, following the Tax Cuts and Jobs Act going into effect on January 1, 2018.

“This bill marks an important moment for the nonprofit sector,” said Kevin Bolduc, vice president, assessment and advisory services, at CEP and co-author of the report. “The question on many nonprofits’ minds seems not to be whether or not giving will be affected, but how much it will be affected. While we won’t know the implications for certain until the end-of-year fundraising tally is complete, funders and nonprofits need not wait to ensure they are best prepared to support important work.”

Fifty-three percent of nonprofit respondents — and the same percentage of funders — reported that they are concerned about reduced charitable giving in response to the new tax law. Nonprofit and foundation leaders were also in alignment in suggesting that foundations can help in this uncertain time by providing advice and assistance to support nonprofits’ fundraising and financial sustainability efforts, as well as by playing an educational role with nonprofits and donors about the effects of the legislation. Some nonprofit leaders — but no foundation leaders — also suggested that foundations can help by broadly promoting the importance of the nonprofit sector and its work to donors and the general public.

“This level of alignment between funders and their grantees is somewhat unusual in our work,” said Ellie Buteau, vice president, research, at CEP and co-author of the report. “It suggests a real opportunity for funders and nonprofits to work together to ensure there’s ongoing funding for crucial work that both groups care about deeply. We hope that sharing these findings helps stimulate important conversations about joint approaches to preparing the charitable sector for whatever effects this legislations will ultimately have on giving.”

The report is available for free download here.

About the Center for Effective Philanthropy

The Center for Effective Philanthropy (CEP) is a nonprofit organization with a mission to provide data and create insight so philanthropic funders can better define, assess, and improve their effectiveness and impact. CEP received initial funding in 2001 and has offices in Cambridge, Massachusetts and San Francisco, California. For more information on CEP’s work, including its research, programming, and assessment and advisory services, see www.cep.org.

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