Philanthropy 2020: Meaningfully Impacted By Politics, Tax Law And Climate Change

As the philanthropic landscape continues to evolve in 2020, expect these meaningful developments.

Political fundraising will challenge charitable fundraising 

2020 is likely to be the most-expensive-ever U.S. political campaign year. Billions of dollars will be donated to national, state and local campaigns. It is projected that media spending alone on U.S. presidential and congressional races will approach $10 billion – with billions more spent elsewhere.

The demand for campaign contributions will challenge the ability of nonprofit organizations to raise funds needed for critical work at local, national and international levels.  By year-end, many donors will be “tapped out” in the political arena and unable to support nonprofits at previous levels. Although political donations are important, we can’t forget the critical ongoing work of nonprofits.

2017 tax law changes continue to limit charitable contributions

Data clearly demonstrate that the 2017 tax law changes adversely impacted 2018 charitable giving.

The income tax law doubled the standardized deduction. At the time, experts predicted that this could reduce the percentage of taxpayers who itemize deductions from 30 percent to only the wealthiest five percent. Plus, the increased estate-tax exemption eliminated any tax incentive for all but the wealthiest 1,800 Americans to make charitable donations at death.

The data show that Americans itemized a whopping $54 billion less in charitable donations in 2018. In addition, according to Giving USA, in 2019 there was a 1.7 percent decline in overall giving to charity organizations and a 1.1 percent decline in the amount donated by individual Americans — 3.4 percent less when adjusted for inflation. Most likely, the tax law will continue this adverse impact on giving.

Issue- and cause-inspired charitable giving will sustain 

For the last three years, there has been a surge in issue- and cause-motivated giving across the political spectrum – with many people contributing time and money to advocacy and policy organizations.

As long as the current U.S. President remains a polarizing figure, supporters as well as detractors will recognize the role played by nonprofits in determining the outcome of issues such as climate change, civil liberties, freedom of the press, abortion rights, human trafficking, environmental protection, immigration, gun safety, voting rights, healthcare and veterans affairs. Americans will continue to use philanthropy as a vital form of civic engagement.

Global-warming giving to heat up 

Daily, the news media report on wildfires raging, icecaps melting, seas rising, temperature-records breaking, species dying, extreme weather increasing, climate-induced human migration happening — and more. As a result, more U.S. citizens are finally beginning to recognize that climate change is the fight of – and the fight for – their lives.

As the crisis grows, so will the philanthropic response. Major foundations are contributing billions to address climate issues. Local and national nonprofits are also active. Consider your own support to nonprofits including Carbon War Room, the Climate Reality Project,  Drawdown, 350.org, Global Footprint Network, The Solutions Project and, in Colorado, The Alliance Center. 

Sustainable investing will increase – especially with philanthropic capital 

Sustainable investing is an approach that considers environmental, social and governance factors in portfolio selection and management. ESG assets in five major markets (the United States, Canada, Japan, Australia and New Zealand) stood at $30.7 trillion at the start of 2018 — a 34 percent increase in just two years. Europe adds another $14.1 trillion. We can expect this momentum to continue.

In the philanthropic world, $1 trillion currently sits in domestic foundations and donor-advised funds. Increasingly, donors are asking, “Where is our money spending the night?” They are choosing to invest their assets for the double bottom-line of both financial return and social impact. In 2020, expect that more donors will fuel their missions from the engines of their philanthropic assets, not just the fumes. 

Philanthropic strategy to deepen

More than ever, leaders in families, foundations and businesses recognize that philanthropy can be more than the transactional act of writing checks or clicking online donation buttons. Philanthropy will continue to be seen as a strategic and intentional process that can be transformational — rather than merely transactional — for both the donor and society.

2020 promises to be a pivotal year on many fronts – including the philanthropic world!