Tuesday, April 24, 2018

New Tax Laws - Implications for Nonprofits?

April 15th has come and gone. I hope you filed your taxes, and of course, I hope that all of us received an above average refund. (I couldn’t resist making a quip that would bring a smile to researchers.)

With 2018, we have a very new tax situation in the United States. The “Tax Cuts and Jobs Act” has produced changes that Time Magazine called the “largest overhaul of the U.S. tax code since the Ronald Reagan era.” Among its provisions, it increases the incentive to take the standard deduction, rather than to itemize deductions, such as donations to charity. Some nonprofit leaders have expressed concern, and research might make those leaders wary. The highly respected Lilly School, for example, suggested that a potential national decline in giving could total as high as $13.1 billion. The Tax Policy Center asserts that the decline could go even higher, to perhaps $20 billion.

Will the new tax laws help or hurt nonprofit efforts and our work to benefit communities? The prediction that someone makes will depend on their assumptions about why people give money to eleemosynary institutions. Do donors contribute because they can reduce their taxes? Or do donors contribute because they want to support a mission, to further a cause, or to support something worthwhile in their community?

You might ask yourself: Why do you donate? If the amount of taxes you pay will change as a result of a change in tax laws, will you adjust the amount you donate to charity?

The argument that the latest tax act will reduce contributions to nonprofit organizations builds on the premise that the opportunity to deduct charitable contributions on a tax return constitutes a significant, if not primary, motivation to donate financially to charitable organizations. By implication, the less effect that donating money has on reducing taxes, the less that people will give financially to charity.

About 40 years ago, my father told me that he believed that the above premise makes little sense. As Dad pointed out, if someone has a major obsession about holding on to their wealth, that person should not donate at all. If someone donates $100 to charity and saves $30 on taxes, they have still parted with $70. Better to just pay the tax and retain the $70.

Evidence suggests that some donors factor tax deductions into their final decisions about charitable gifts. The loss of the opportunity to take a tax deduction might result, in 2018, in fewer or smaller charitable donations. However, when push comes to shove, will most donors give more weight to the mission they want to support, or to the tax benefit they no longer receive for donating?

Further informing this topic, aggregate data show that nationally about 74% of taxpayers do not itemize their deductions on their tax returns. These people already receive no direct tax benefit from making a charitable donation. Beginning in 2018, the standard deduction increases to $24,000. This will reduce the number of people who itemize their deductions, thus reducing the number of people for whom a charitable contribution results in a lessening of taxes. Nationally, the Tax Policy Center expects the percent of non-itemizers to rise by 15 percentage points from 74% to 89%.

If those 15% of taxpayers have tax savings on their mind, and have no strong allegiance to charity, then donations to charity might decrease. However, if other factors influence their decision to donate to charitable organizations, then the new tax laws will have weak or no effects.

History can inform us as well. Many nonprofits feared that the 1986 tax act would lead to a major decline in donations to charity. That major decline did not occur.

Something else to keep in mind: A dollar “given” to Uncle Sam does not serve a completely different purpose from a dollar given to charity. The National Priorities Project at the Institute for Policy Studies (which has a “progressive” bent) shows that, of the money we taxpayers paid in 2017, close to 30% went toward health; 7% went to unemployment and labor; 4% went to education. (Of course, 24% went to the military which, albeit necessary to maintain, certainly does not exist as part of the charitable, nonprofit sector.)

Federal spending has significant effects on our communities’ well-being – think jobs and nutrition, for example. The more that we can inspire and align the work of government and the work of nonprofits, the better.

So, what’s my prediction? Probably that most people will continue to give as they have in the past. Maybe that’s my optimistic side and my faith in humanity. Tracking the effects of the tax act becomes complex because some evidence suggests that a slight decline in charitable giving might have begun during the 21st century, well before the new tax act. Additionally, changes in the economy, positive or negative, will influence giving trends. So, perhaps we will never definitively know the effects of “TCJA” upon charitable giving.

In any case, I’m fulfilled by carrying out my legal obligations as a taxpayer, just as I am fulfilled by carrying out my moral obligations as a donor. One way or another, we need to fulfill our duty to care for each other.

Wednesday, April 04, 2018

50 Years Since Dr. King's Assassination

I recall hearing about the assassination of Dr. Martin Luther King, Jr. on the evening of April 4, 1968. In part, the news seemed shocking. Sadly, it also seemed like the next step in an inexorable series of 1960s killings including John F. Kennedy, civil rights workers, Malcolm X (assassinated just a couple of miles from where I attended school), and others. Rather than deter or stifle us, however, Dr. King’s murder motivated us all the more to advocate for just policies and just treatment of all people; it led many of us into careers in organizations where we could try to improve our communities and the world.

Would Dr. King feel that we had succeeded or failed during the past half century? Probably a mix. We have passed legislation to address some of the blatant problems of discrimination; we’ve reduced redlining and other institutional practices that directly limited access by people of color to home ownership and other resources, and which indirectly contributed to education and health care issues. Life expectancy differences between blacks and whites have narrowed; access to higher education has increased for people of color, along with degree completion. However, significant racial disparities remain in education, housing, employment, and heath. We definitely have not yet achieved the dream.

Racial disparities in the United States and other nations constitute not just an ethical failure. They threaten to undermine our ability to sustain democracy and make progress as a global human family.

As Dr. King stated (in one of my favorite quotes from his speeches): “In a real sense, all life is inter-related. All men are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.” We must keep that principle in mind, as we address local issues of education, housing, and health care, global issues of peace, migration, and economic development, and everything in between.

This is a day to renew our commitment to carrying the torch Dr. King lit.

Tuesday, March 27, 2018

Caring for Our Small Planet's Social Environment

"We are in danger of destroying ourselves by our greed and stupidity. We cannot remain looking inwards at ourselves on a small and increasingly polluted and overcrowded planet." – Stephen Hawking

Strong words from the recently deceased Stephen Hawking – and more negative words than I would normally place in the preface of a post. However, his comments resonated with thoughts I shared – regarding our social environment – with a couple of hundred people at the Minnesota Compass annual meeting several weeks ago:

  • “Post-truth” became the Oxford-English Dictionary’s word of the year in 2016. It has entered our common parlance, along with “alternative facts” and Hope Hicks’ “white lies.”
  • “Agnatology,” a word coined 20 or so years ago as a label for the study of culturally induced ignorance, has increasing relevance.
  • People in the Democrat and Republican parties in the United States literally fear one another, as I mentioned in a previous post. People with differing political views have increasingly clustered together to live in communities with others who share those views, resulting in less interaction with divergent perspectives.

In short, pressures and barriers have mounted to create more “inward looking” than “outward looking” with respect to the important social issues that we face.

If we take an open-minded look outward, using real facts, not “alternatives,” what do we see? At that same Compass annual meeting, Allison Liuzzi showed us that:

  • A number of indicators reveal improvements in our communities: economic output; jobs; education; crime rates; traffic fatalities; and others.
  • But some important indicators show we have changed little or not at all during the past 10 years: median household income; poverty; homelessness; and others.
  • On one indicator, voter turnout (usually a source of pride for Minnesotans), we have declined – perhaps due to some of the issues I mentioned above?

Good news, in some respects; unsettling in other respects. Yet whether we see improvement or not on any specific measure of our quality of life, one fact stands out: The most rapidly growing portions of our population tend not to do as well as our majority of residents. Take a look at Compass indicators, and you will find a common theme: gaps in the quality of life for residents of color vis-à-vis white residents. We must address this, if we care about equity, or if we want to ensure a sound future in which new generations of Minnesotans continue the great strides of past generations.

As Compass reports, people of color (including a wide range of backgrounds, from indigenous to recent immigrants) are more likely to live in poverty, less likely to own their own home, less likely to graduate from high school, and more likely to suffer from chronic illness.

Nicole MartinRogers pointed out to our annual meeting participants that to address existing disparities, as well as to build the strengths of our Minnesota mosaic, we need to apply the best possible tools to understand the demographics of our multi-racial state. We need an objective, clear, nuanced picture of our residents. Living conditions and needs of different groups differ from one another. Creation of sound policy that will enable us to make progress requires appreciation of the nuances so that we can build on the rich diversity of our population.

So, back to Stephen Hawking and his critique of only looking inward.

Hawking’s words do relate to the rationale behind the operation of Minnesota Compass, an accessible, completely free-to-use website (which, by the way, recently won a “dot.org” award from the Minnesota Council of Nonprofits). Compass has creatively used technology to provide everyone in Minnesota easy access to nonpartisan, objective, relevant facts – not the alternatives, but the real facts. A resident of any of the state’s 87 counties, sitting in their living room, can obtain the same information as our state’s Governor sitting in the halls of power.

Compass provides a broad view as it supports efforts to make communities better. It promotes looking outward, taking into account all people, their perspectives, their cultures, their current situations.

We need sound tools to preserve our society’s strengths and to ameliorate our society’s weaknesses. Minnesota Compass, along with all the work of Wilder Research, strives to provide those tools.

Tuesday, January 23, 2018

Obsessing about Trump’s Comments, or Making Progress: We can decide

“He emerged from the Metro at the L’Enfant Plaza Station and positioned himself against a wall beside a trash basket. By most measures, he was nondescript: a youngish white man in jeans, a long-sleeved T-shirt, and a Washington Nationals baseball cap. From a small case, he removed a violin. Placing the open case at his feet, he shrewdly threw in a few dollars and pocket change as seed money, swiveled it to face pedestrian traffic, and began to play. It was 7:51 a.m. on Friday, January 12, the middle of the morning rush hour. In the next 43 minutes, as the violinist performed six classical pieces, 1,097 people passed by.”

You might recognize this story, from 2007. The violinist was Joshua Bell, one of the finest classical musicians in the world, playing a violin valued at $3.5 million. As the news report indicated, “His performance was arranged by The Washington Post as an experiment in context, perception, and priorities…In a banal setting at an inconvenient time, would beauty transcend?”

The result? During the 45 minutes that Bell played, only 7 people stopped for at least a minute; 27 people tossed in a total of about $32, and 1,070 people hustled past the assumedly common busker.

Gene Weingarten, the reporter who wrote the story about this event, asked the question: “What is beauty?....Is it a measureable fact, or merely an opinion?”

Extreme partisanship: an obscurer of our goal

As I pondered the possibilities for 2018, the Joshua Bell story came back to me. Where should we look for “beauty”? Where should we look for “goodness”? How should a focus on the good energize us, shape our behavior, and keep us on a path to improve the quality of life for all people? But then, with some apprehension, I considered the current partisan divide – perhaps worse than it has ever existed in this nation.

Partisanship has skyrocketed during the past two decades. In her Theodore H. White Lecture at Harvard University, Nancy Gibbs asserted that the political center has “all but vanished.” She noted that since 1994, Pew Research data showed that the number of Democrats and Republicans seeing the opposing party as “very unfavorable” more than doubled. She contends that the partisan gap divides us more than any other divide – race, income, gender, or anything else.

Remarkably, Pew showed as well that people view members of the opposing party with fear. “More than half of Democrats (55%) say the Republican Party makes them “afraid,” while 49% of Republicans say the same about the Democratic Party. Among those highly engaged in politics – those who say they vote regularly and either volunteer for or donate to campaigns – fully 70% of Democrats and 62% of Republicans say they are afraid of the other party.”

Nate Silver’s analysis of presidential elections during that same time period showed that for the Trump vs. Clinton election of 2016, “Of the nation’s 3,113 counties (or county equivalents), just 303 were decided by single-digit margins — less than 10 percent. In contrast, 1,096 counties fit that description in 1992…During the same period, the number of extreme landslide counties — those decided by margins exceeding 50 percentage points — exploded from 93 to 1,196.”

Whether the result of self-selection through preference, or a product of social forces and deliberate policies that promote homogeneity, these data provide stark evidence of political segregation: we tend to cluster in proximity to people who think and vote like we do. Does this promote silos? Does this foster the partisan divide? Does this contribute to political gridlock around issues we need to resolve?

In my conversations, personal and professional, I perceive many liberals and conservatives poised to pounce on any incorrect utterance from the other side. It seems much easier to make ad hominem attacks (justified or unjustified) than to tackle issues of substance. That is troubling.

700,000 DACA residents have had their lives literally on the line; the future of these individuals lies in large part under the control of our legislators. However, beginning with one infamous meeting that included the President, the conversation in Washington and throughout the U.S. shifted predominantly to debates regarding: Did the President say “hole” or “house,” or did he say nothing of the sort at all?

As the outlook for DACA legislation dimmed, and as the final days passed toward the deadline for a government shutdown, cable news was replete with legislators from both parties speaking from the same template: “Well, since they did X, we must do Y. It’s their fault, of course, because they said A after we said B, but we said that because they had previously said C.” Attack – parry – riposte; the verbal duels proceed, with everyone stuck in place.

Finding “goodness” amidst division

We need to sift through this mudslide of argumentation, to see and testify to the beauty and the good of our fellow human beings. We must keep our eye on the prize – quality life for all, in accordance with our values – and not be waylaid by partisan bickering.

We may need to suck it up, bide the current situation (which we can change in future elections), and figure out how to work with others who hold different views and how to work around racist and incompetent leaders. Unfortunately, a certain proportion of public officials, organizational leaders, and community leaders are racist or incompetent, or both. I’ve worked my way around them in the past, and I plan to continue working my way around them in the future. If Martin Luther King and his visionary counterparts had waited to act until after the uprooting of every racist public official and community leader, no civil rights progress would have occurred.

Golden days of bipartisanship might, or might not, have ever existed. Nonetheless, let’s take our cue from the 7 people who stopped to listen to Joshua Bell – to look for beauty – not from the 1,090. As a New Year’s resolution, let’s keep our eye on the prize and resolve to work collectively in 2018, respecting differences, willing to compromise.

Tuesday, December 19, 2017

Information. Insight. Impact.

That tagline graces the Wilder Research entryway and greets us and our guests. We try to live up to it, year in, year out, including during 2017.

Production of information never constitutes an end in and of itself. Instead, information serves as a tool, enabling us to create the end we truly seek: positive impacts on the lives of individuals, families, and communities. We accomplish that by enhancing insight that shapes programs, policies, funding, and actions of organizations working for the common good.

What have we accomplished during this past year, as we have worked on over 200 projects in partnership with nonprofit organizations, government agencies, and community groups? With so many projects, and 90+ staff working diligently, I can only offer a taste of our work. It has included research to: 
  • Reduce health disparities, improve health, and promote health equity
  • Address gaps in the delivery of services to people in need
  • Support the care of families and aging adults
  • Benefit youth, especially those whom society has historically excluded
  • Strengthen supports for those struggling in school
  • Enable the imprisoned and their families to build new lives
  • Prevent victimization and exploitation
  • Improve the effectiveness of neighborhood groups
  • Support large scale initiatives by major foundations addressing global challenges

Our projects have involved program evaluation studies, community demographic analyses, major surveys, cost-benefit analyses, and other activities. Our work has focused locally, nationally, and internationally. We share a lot – making information and insight available free of charge, to increase the impact of others. We feel good that every completed piece of work, every presentation contributes to taking a step forward; each step forward helps to move the dial to improve the quality of people’s lives.

However, as a nonprofit organization ourselves, we confront, along with our fellow nonprofit organizations, a spiritual angst – perhaps more salient at this time of year: We love our work, but much of it we wish we had no need to do. Wouldn’t I be happier if I could work myself out of a job? Wouldn’t I prefer that the research we do at Wilder Research became mostly unnecessary because we had solved the major problems of the world?

The answer is yes.

Thank you to our partners during 2017 – the innovators, the champions, the bold thinkers and the nose-to-the-grindstone, persistent, hard workers – those of you who put your talents to use in making the world a better place. We take pride in our collaborative accomplishments. It might seem odd to “celebrate” those accomplishments, because the work we do often has its genesis in the problems and challenges that communities and organizations face. The happiness of celebration will arrive if and when we no longer confront those issues. In the meanwhile, we share with you, our colleagues and supporters, the passion to make life better for people everywhere.

In that spirit, I hope you find peace and fulfillment as this year concludes, and I wish you the best for the New Year.