As I sit in the warmth of my office looking at the brilliant sparkle of sun flashing off newly fallen snow, I have a great sense that this is a time of the year set aside for many to envision what the new year holds for us personally, as well as the organizations we serve. I have been very fortunate over the years to serve on many nonprofit boards and assume leadership roles in those organizations. In every case, I had the good fortune of working with outstanding executive directors.
With the start of the new year, I took the opportunity to have candid discussions with those EDs about what they consider to be their greatest challenges in 2018 and beyond. Surprisingly, the answers among them were very similar.
Challenge #1: Impact of New Federal Tax Law on Donor Giving
High on the list and universal among those I spoke with is the impact of the new federal tax law on their organizations’ financial support. Each noted that the previous federal tax law that permitted an itemized deduction for charitable giving was not usually the primary motivation for their donors, but the tax benefit of the donation was often an exponential multiplier in the amount of their gift.
With the new higher standard deduction now available to taxpayers, this exponential multiplier effect will not likely influence most nonprofit supporters/contributors. So those who itemize and claim charitable deductions will continue to consider the tax benefit of charitable contributions, but the great majority of donors who make more modest contributions – including millennials -- will not likely enjoy any tax-savings incentive because it has been consumed in the expanse of the standard deduction.
Consideration: Increase the breadth of your organization's donor demographics
With the real possibility that donor support will evidence a reduction in individual giving amounts, the challenge becomes how to combat and successfully address that probability. As a teenager growing up in a community that had a strong concern for maintaining public parks and other common areas, it was always “preached” to us that “many hands make light work.” This adage can and should be considered as applying to this pending challenge of declining individual support. Creative thinking and effective means of reaching new donors must be embraced. Not only will these activities combat the likely financial support challenge, these activities can begin to identify new leaders and volunteers for the second challenge that follows.
Consideration: Re-evaluate the organization’s Investment Policy Statement
How will budgets and ongoing programs be supported and carried out as the ripples of the new federal tax law radiate out into the economy? As the financial markets continue to evidence new economic highs, organizations should re-evaluate their investment policy statement and position for the future. But beware, the pressures of possible declines in future charitable support should not be a motivating factor in “swinging for the fence” to hit a home run in portfolio returns. Sound fiduciary investment management should continue to be the guiding principle for endowment and asset management.
Challenge #2: Finding Tomorrow’s Nonprofit Leaders and Supporters
A second challenge for many nonprofits is supporter engagement. Make no mistake, this challenge has been around for a long time, but the new wrinkle is in identifying and securing the commitment of supporters to serve in board or trustee roles. As the current “baby-boomer” generation enters retirement, many nonprofit board positions are becoming vacant with an alarming scarcity of prospects to fill those leadership roles.
To be clear, the issue isn’t about a lessened sense of stewardship or community giving among the younger generation. In fact, it’s quite the opposite. Many enjoy and are energetically engaged in the episodic experiences of a “Day of Giving,” or other community-support organized activity. However, few, it would appear, have the time, insight or passion to envision ongoing board service with the same energy.
What’s causing that involvement gap? There are many factors including time commitments, lack of understanding fiduciary and board service responsibility, board diversity composition, and financial support thresholds often requested of perspective candidates. [For more insight into the six questions to ask before saying ‘yes’ to nonprofit board service, click here.]
It appears our current economy and societal pressures to maintain employment have caused many professionals just starting out in their careers to simply have no time to run the “extra mile” for sustained community service. Moreover, employers are less understanding of the necessary time commitments in many instances and volunteers often believe that they don’t have the knowledge or skills to serve in leadership capacities.
Consideration: A Team Approach to Board Training
Finding, securing the commitment, and training new board members should be a shared responsibility of the existing board and the executive director. Many who are approached to volunteer in this capacity need to be encouraged to understand that after the “I will serve” has been offered, it is a shared commitment of the individual and the organization to create a contributing, engaged board member.
Encourage and remind board members of this responsibility so that other more creative and productive means of supporter engagement can be initiated that will resonate with the next generation.
"If everyone is moving forward together, then success takes care of itself." --Henry Ford
McKinley Carter’s Nonprofit Advisory Services division provides a variety of investment and consulting services customized to the unique needs of charitable organizations. Whether you are a board member, executive director, or community-minded volunteer, we can provide the tools and help you plan for a successful future for your organization.