Adjusting to New Trends in Philanthropy


The philanthropic landscape is rapidly changing. Income inequality is on the rise, mega-donors are increasingly monopolizing philanthropic giving, and middle-class taxpayers are grappling with the impact of the Tax Cuts and Jobs Act. These changes are reflected in a trend towards larger gifts from a smaller pool of donors, and the use of donor-advised funds and other tax-friendly methods of charitable giving.

In a new report from the National Philanthropic Trust, it’s clear that donor-advised funds are increasingly popular as a method for giving to charity. In 2017, for the eighth year in a row, DAFs grew at a record pace and now encompass over $1 billion in charitable assets. Donor-advised funds are just one of the methods taxpayers are turning to in order to continue taking advantage of tax subsidies in the wake of the Tax Cuts and Jobs Act. Other methods, such as charitable gift annuities or charitable remainder trusts, likewise allow donors to “lump” several years’ worth of contributions into a single large donation. But for those donors who do not possess the assets or capabilities for this type of giving, the incentive to make smaller or more frequent donations has decreased.

Yesterday’s Giving Tuesday campaign is one of those fundraising events that rely on large quantities of smaller donations (the mean donation in 2017 was $120). It may be days or weeks until we have a clear idea of the financial results from this year’s campaign, but many in the nonprofit sector see the larger-donor trend and recent tax reform as a warning sign for events like Giving Tuesday. With philanthropy increasingly moving towards mega donors and major gifts – and the TCJA reducing the tax incentive for lower-income Americans to make charitable contributions – many nonprofits are understandably concerned about the potential impact to their funding and operations.

For nonprofits, this may mean more sporadic influxes of funding, requiring careful financial planning to stretch infrequent, larger donations through more “lean” years. It may also mean a new approach to fundraising and donor communications. Educating your mid-range donors on their tax options and reminding all donors of the value of their contributions may help avoid a decline in small or mid-sized donations.

The nonprofit financial landscape is changing rapidly. Will your organization be able to keep up?