Editorial: Avoiding that lump of coal
As President Barack Obama and House Majority Leader John Boehner debate ways to avoid falling off the so-called fiscal cliff, for a while there it was local and national nonprofits that might have gotten a lump of coal in their Christmas stockings — and they’re not in the clear until the ink is dry on this year’s budget deal.
For the past couple of years, President Obama has submitted budgets calling for a cap on charitable giving to nonprofits, which are high enough that such donations mainly apply to the ultra-rich. That proposal called for reducing the tax benefit on charitable giving from 35 percent to 28 percent above the cap. The proposal, experts estimated, would raise a modest $10 billion to reduce the deficit — barely a ripple in terms of reducing the nation’s projected $981 billion 2013 budget deficit, but substantial in terms of its impact on the nonprofit world if it were to lose that revenue.
Back in the summer, Republican Mitt Romney proposed capping charitable deductions at a more drastically reduced amount, a suggestion that would have placed an even greater burden on nonprofits. Calmer heads, and powerful lobbying, may have convinced the powers that be to look elsewhere for ways to cut the budget — leaving the basic tenets of charitable giving deductions intact for at least another year.
But that doesn’t leave nonprofits off the hook and in the clear. Fact is, giving for many of our local nonprofits is down this year as it has been for the past few years of the Great Recession. The reasons are obvious: contributions to area churches, arts and theater associations, museums, boys and girls clubs and teen centers, as well as many other nonprofits, all benefit from a healthy economy. When all boats are floating high in the water, more people are able to give.
The reverse is also true.
Adding further injury, some organizations get a double-whammy when times are tough. The arts and theater groups, museums and other cultural institutions seem to fare worse at the onset of a recession because people’s giving shifts to those organizations responding directly to human service needs: homeless shelters, food banks, heating assistance and the like. Consequently, while the arts and cultural institutions may be having good years in terms of big-name performances, packed houses and apparent community support at the events, contributions and even individual and family memberships may be down. Add in the fact that the Great Recession of 2008 lingered for three years and it’s easy to see why some institutions are more than a bit worried.
That’s not all. The fiscal cliff is very real. Even if a cap on charitable giving is not put in place, nonprofits are in for more tough times ahead because federal spending on programs that help those in need will likely be reduced; that will affect how much the states have to spend on those programs, as well — organizations like HOPE, John Graham Shelter, Addison County Food Shelf, Addison County United Way, Humane Society and many others will likely feel the pinch. To keep those programs robust, directors have to turn to donors, which in the relatively small universe of Addison County puts a lot of demand on those able to give.
The upshot? Now that the economy is rebounding and the nation’s economic future is not in the free-fall we witnessed from 2008-09 and the sluggish economy of 2010-11, let’s all review our giving to those organizations and institutions in our towns that we hold dear.
A good first step is to rejoin the arts, theater and other cultural organizations that depend on broad community support — not just for funding, but also as enthusiastic supporters of the arts in every aspect. A good second step for those who can is to reassess your giving. Understand that cultural organizations depend for more than 50 percent or more of their budgets on contributions, with less than half dependent on ticket sales, memberships and other event-based campaigns.
As the end of the year approaches and tax decisions are hanging in the balance, the challenge nonprofits face is how to fulfill the communities’ needs with a declining budget. The challenge donors face is how to allocate their resources in ways that meet the community’s basic needs as well as keeping it culturally vibrant. The point to remember — in this giving time of the year — is the latter part of that challenge is as important as the former.
Angelo S. Lynn