Don’t Trip Over The Fiscal Cliff

Don’t Trip Over The Fiscal Cliff

The gap of the political landscape continues to increase months after a polarizing election. The fiscal cliff is a metaphor that both sides of the aisle use in a vain attempt to move the opposition to action.

The Chronicle of Philanthropy (The Chron), the authority of nonprofit news, has covered just how the sector will react if Washington ushers the country off the precipice. This blog is a reaction to The Chron’s coverage. I argue that the fiscal cliff is a national hype that loses its impact when applied to the local context of the nonprofit sector. I also urge nonprofits to have the courage to speak about how policy will impact the constituents of the sector.

Background:

Just this week, The Chron reported that national advocacy groups, such as City Year and the Independent Sector, met with the White House to discuss the President’s initiative to increase taxes among America’s wealthiest (Gipple and Gose 2012). Later, the Independent Sector came out with support of the White House proposal (Gipple and Gose 2012); others continue to avoid this divisive political hazard either by remaining silent or through press releases written just vaguely enough to avoid offending all, by saying nothing at all.

The Chron’s Lopsided Coverage:

An hour’s survey of The Chron’s web page reveals the misplaced focus  in their coverage as the lopsided analysis describes how the fiscal cliff will impact the giving patterns of the wealthiest Americans (a term within itself that is often ill-defined across news reports; a criticism of the media industry not just The Chron). While some donors are investing in Charitable Trusts and donor-advised funds this year to get all of their tax benefit (Hall 2012), other wealthy philanthropists are in self-regulated holding patterns as the proposed $25,000 cap on annual deductions remains a salient option in Congress (Donovan 2012).

The wealthy do not have a monopoly on giving in America. Despite this fact, little is said about the very low income, low income, or moderate income households that give.

Why the Chron’s Coverage Needs Readjustment:

It is clear that, ironically, The Chron does not read its own research.  Despite the lack of current analysis about the above mentioned groups, in August 19th, 2012 The Chron published the results of a study that describes the significance of the non-wealthy philanthropist.

The results show that the non-mentioned philanthropist are worthy of attention. Researchers concluded that individuals who have less income give the most. An excerpt from a summary article outlines the basic findings:

“According to the report, middle-class Americans give far bigger share of their discretionary income to charities than the rich. Households that earn $50,000 to $75,000 give an average of 7.6 percent of their discretionary income to charity, compared with an average of 4.2 percent for people who make $100,000 or more. In the Washington metropolitan area, for example, low and middle income communities like Suitland, MD., and Capitol Heights, MD, donate much bigger share of discretionary income than do wealthier communities like Bethesda, MD and McLean, VA. “ (Gipple and Gose 2012).

The political uproar about the fiscal cliff wages on. However, as the nonprofit sector measures how far the sector will fall, let us keep in mind studies such as these that remind us of the sector’s most loyal giving base.

According to the mentioned study, it is the middle class (those who have $50,000-$75,000 of annual net income) that give the most; yet it is the 1% ($200,000 annual net income) that receives the most coverage by one of the largest nonprofit news outlets (Gipple and Gose 2012).

What Nonprofits Can Do With This Information:

Media can afford to be lazy and focus on a high profile sub-sect of the population. However, when the impact of the fiscal cliff is localized to Main St.,  it is clear that nonprofits cannot rely on the Independent Sector and other national lobby groups to conduct the required research or lobby efforts.

Nonprofits have to be aware of their own funding portfolio and then determine what impact other salient issues may be of concern for their most loyal givers in the New Year.

The Chron’s study uses a methodology based on IRS Tax returns and zip code analysis (Gipple 2012). I argue that nonprofits need to remain grounded in the context of their own localized giving environment. Allow the media to cover the hype of the wealthy; but nonprofits need to remember it is not the wealthy that supports the sector the most.

Do Not Be Afraid to Speak Up!:

From ancient Greece to the turn of the 20th century America, the nonprofit sector has been advocates for those who need it most.

The Alliance for Charitable Reform was the first to publicly rebuff the White House’s request, saying charities “should not be forced to enter this political wrangling.” (Donovan “Nonprofits Split” 2012)

I agree: nonprofits, especially the direct services such as clinics, food banks, and home builders, should avoid politically charged discussions that are not part of the main mission of the organization. However, each nonprofit is an advocate for its clients; if only through the delivery of services.

When appropriate (either through bylaws, board approval, mission or staff leadership’s vision), nonprofits must not coward from weighing in on salient matters. As seen each election year, organizations such as Nonprofit Vote educate the public about how to participate in our American democracy; not how to be politically biased.Such organizations remain relevant through the provision of nonpartisan information to the public.

A nonprofit sector silent about national concerns is a sector that is out of touch with the pulse of America and the people we serve.

 

The Bottom Line:

Nonprofits: Do your homework, know your constituents, know your donor-base, know the concerns of your donor-base, and boldly give voice to these concerns.

Works Cited:

 

Gipple, Emily. 2012.”How the Chronicle Compiled Study”. http://philanthropy.com/article/How-The-Chronicle-Compiled-Its/133667/

 

Hall, Holly. 2012.”Deduction Uncertainty Fuels Giving by the Wealthy” 21 December.  http://philanthropy.com/article/Deduction-Uncertainty-Fuels/136379/

 

Donovan, Doug. 2012. “Charities Would Lose $10 Billion Under Tax Cap” 3 December. http://philanthropy.com/blogs/government-and-politics/charities-would-lose-10-billion-under-tax-cap-white-house-says/31309.

 

Donovan. Doug. 2012. “Nonprofits Split on Supporting Obama Tax Plan” 18 December. http://philanthropy.com/article/Nonprofits-Split-on-Supporting/136357/

 

 

 

 

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