6 ways nonprofit leaders can navigate an unpredictable political landscape
February 8, 2017
Wise nonprofit leaders try to steer to the political center, to avoid partisan conflicts with potential donors, supporters and audiences -- but doing so isn't always easy. Here are six timely suggestions from Peter Fissinger, President & CEO of Campbell & Company.
by Peter Fissinger
With President Trump wasting little time to sign executive orders and alter policies, nonprofit leaders are wondering how to deal with the rapid changes and uncertainty. To help nonprofits succeed in this environment and continue to push for success, my Campbell & Company colleagues and I compiled some suggestions nonprofits can use to succeed over the next several years.
Watch the economy first and tax policy second.
“Giving USA” data indicates that the biggest predictor of philanthropy is the economy. When the economy recovered from the recent recession and grew, total giving hit record highs in 2012, 2013, 2014, and 2015. Many analysts now predict economic growth for 2017 and 2018, albeit at a lower rate than in previous years. For this reason, Philanthropy Outlook — a set of forecasts made by researchers at Indiana University’s Lilly Family School of Philanthropy and the consulting firm Marts & Lundy — maintains high expectations for giving in 2017 and 2018. However, nonprofits should remain cautious for pullbacks over the long term.
Tax policy is more complicated. Since it originates in the House of Representatives, President Trump does not have legislative control, but he can sign a bill into law or veto it. Republicans have already indicated they intend to alter tax policy. It just remains to be seen where legislators and the White House agree.
If Mr. Trump got his way, he would consolidate the number of tax brackets from seven to three, reduce marginal tax rates, raise the standard deduction to $15,000, and put a $100,000 cap per individual on itemized deductions. The nonpartisan Tax Policy Center posits that if fully implemented, these proposals could decrease charitable giving by 4.5 to 9 percent. However, Mr. Trump will inevitably have to compromise with legislators.
The leader of tax-reform efforts in the House is the chairman of the Ways and Means Committee, Republican Representative Kevin Brady of Texas. He put forth a different plan, one that does not include a cap on itemized deductions. With more deliberation to come, it will likely be some months before we see final changes to the tax structure.
While taxes are important, the 2016 U.S. Trust Study of High Net Worth Philanthropy showed that only 18 percent of high net-worth individuals cite tax benefits as a reason for giving. In the same survey, 54 percent responded that a belief in the organization's mission was the core reason for giving. This shows that while tax benefits can influence philanthropy, they are not the driving factor for most wealthy donors.
Let politics inform your work but not define it.
Effective organizations achieve results because their missions speak to people's hearts. Nonprofits far outlast any presidency, and organizations' values should reflect donors' beliefs. Nonetheless, political changes can inform strategy. When people donate to a nonprofit, they buy into the mission and consider it an agent of change. Find a way to harness this mind-set by analyzing how new political leadership and trending activist movements motivate people. These trends can indicate how to communicate with prospective donors because they tap into an understanding of what people want.
Some nonprofit causes are already showing success in responding to political changes. These include women's health, the environment, international nonprofits, and social-justice groups. It could be worthwhile to analyze how these nonprofits use political trends to craft engaging messages. If possible, mirror this tactic to fit your organization's values.
Position your organization to adapt to sweeping changes, especially in health care.
When a single policy change affects millions of people's lives, nonprofits will inevitably be affected, too. This is already happening in health care with Congress taking first steps to repeal the Affordable Care Act. Says Aggie Sweeney, chief executive of Collins Group, a division of Campbell & Company, and chair of the Giving USA Foundation, “Health care has been in a state of transition for years as a result of mergers and changes in the way services are provided and paid for. This has left a clear impact on donor loyalty.”
Vulnerable populations may see a shift in needs, employer mandates for covering workers may change, and partner organizations may be affected. It is important for nonprofits to position themselves to adapt. While a change in mission is usually not warranted, nonprofit leaders should consider alternative ways to provide services and work with people outside the organization to bolster their mission. Other policies will have similarly far-reaching consequences.
Backup plans for disruptions in government funding, the tax structure, or a recession can prepare organizations to weather challenges and take advantage of new opportunities. Nonprofits need to think carefully about resources and partnerships that are most critical to sustaining and advancing their missions. No matter what happens, analyzing the possibilities ahead of time will help organizations adapt and thrive.
If there is another recession, rely on close donor relationships.
With no guarantee that the economy will continue to grow at the current rate, it makes sense to be prudent and plan ahead. During tough economic times, people tend to give to fewer organizations rather than give less to the groups most important to them. If there is a recession, close donor relationships will be an organization’s biggest asset. Nonprofits must communicate why their mission matters, again focusing on the lives the institution has changed as a result of its work and the impact of a gift. If donors believe in a group’s mission, they will be more willing to stay connected and support it through thick and thin.
Speak up for the value of the nonprofit world at all levels of government.
For some nonprofits, local policies can be just as important as federal ones. By working to build connections with city-council members, county commissioners, mayors, state lawmakers, and governors, organizations will be better positioned to understand and affect policy and funding changes. If elected officials understand the role of nonprofits and the urgency of the issues they confront every day, there is a better chance for favorable policies.
At all levels of government, nonprofits will benefit from working together as advocates. Politicians from both parties have periodically advocated for either eliminating or capping the charitable deduction, which could reduce philanthropic giving. Though the charitable deduction has earned bipartisan support in the past, maintaining that support will take the efforts of the entire nonprofit world, and all nonprofits should communicate why this deduction matters. Even if the United States implements widespread tax reform, many tax incentives have a chance to survive. We would hope the charitable deduction is among them. To ensure this, we have to unite to make the case that nonprofit organizations matter.
Stay committed. Nonprofits can thrive under any administration.
The best thing we can do is to do our jobs well every day and advocate for ourselves. History suggests that the organizations that are effective and committed can survive and thrive under any administration.