As much as it pains me to say this, in many ways it’s a tough time these days to be the leader of a community foundation. On top of competition from commercial donor advised funds and muted future prospects for investment returns, now comes the Tax Cuts and Jobs Act of 2017 which will mean far fewer people will be able to deduct charitable gifts on their tax returns. In addition, the exemption from the estate tax doubles. The effect on charitable giving is unclear, but most experts think charitable gifts will go down, perhaps by billions of dollars a year.
Sometimes it seems community foundations are just afterthoughts in the grand political scheme. Bruce Springsteen said it best:
Lights out tonight, Trouble in the heartland,
Got a head on collision, Smashin' in my guts, man,
I'm caught in a cross fire, That I don't understand.
We all face pressure to grow our community foundations. I know that asset growth is not the best metric for measuring community foundation success, but in a world where your staff expect annual raises and health care costs rise by double digits each year, asset growth is the best way to both produce a balanced operational budget and continue to serve the needs of your community.
But let me suggest a viewpoint that is not all doom and gloom.
Yes, some donors will reduce their charitable giving because they don’t get as generous of a tax deduction. I’ve worked with plenty of those donors in the past.
But it’s been my experience that your very best donors – the donors who will support you for a very long time -- don’t make their gifts for the tax consequences. They do it for love.
They love their school. They love their soup kitchen. They love their local philharmonic orchestra.
Or maybe they want to preserve in perpetuity the memory of a love they lost. The child that died too soon. Their favorite grandmother. Their hardworking parents.
For many of them, they just want to express their love for the community that means so much to them.
Your best donors are the ones who give based on love, not on tax consequences. Those gifts help them fulfill a deeply personal need – the need to keep alive, forever, a kindness remembered, a cherished experience, or a heart-felt memory. You, as the leader of your community foundation, help those donors achieve their loving goals for good. And forever.
Washington can change the tax incentives but they could never change the love that your donors have for you and what you do for your community. Take the long view. Have faith that what you are doing can survive the political winds. Springsteen also speaks of this:
There's a dark cloud rising from the desert floor
I packed my bags and I'm heading straight into the storm
Gonna be a twister to blow everything down
That ain't got the faith to stand its ground
Community foundations seem like they are heading into a storm. But have faith. It’s not the Badlands. It’s the Promised Land.