- Grassley Praises WWP Management Changes
Wounded Warrior Project (WWP) inaccurately reported the percentage of donor funds spent on program services – particularly long-term support for veterans – and its use of joint cost allocations (JCA) though legal under the tax code, was questionable, according a key U.S. senator who reviewed the charity after its spending practices were questioned last year.
WWP also spent “excessive amounts” on employee travel expenses and lacked sufficient policies and procedures to manage the organization. But while the charity also spent excessive amounts of donor funds on administrative and fundraising events, executive salaries were reasonable, Sen. Charles Grassley (R-Iowa) said in a memo released today.
Fourteen months after initially requesting information from WWP about spending and management issues raised in media reports, Grassley released a memo detailing his findings. The chairman of the Senate Judiciary Committee directed the 15-page memo to members of the Senate Judiciary and Finance committees and it includes nearly 500 pages of supporting documents, some made public for the first time, including the independent review commissioned by WWP.
The Jacksonville, Fla.-based charity recently filed its most recent Form 990, which revealed a 20-percent drop in revenue for the fiscal year that ended in September and drastic cuts to expenses, particularly online and direct response television (DRTV). The organization reported $322 million in revenue compared with $398 million the previous year. In the aftermath of January 2016 stories by The New York Times and CBS News, WWP commissioned an independent review of its policies and procedures and eventually fired Chief Executive Officer Steven Nardizzi and Chief Operating Officer Al Giordano.
WWP routinely said it spent almost 81 percent of program expenses on veterans, a figure that Grassley classified as “misleading” because if it included donated media and millions of dollars for fundraising. He cited 68 percent as a more accurate figure and said the organization should better explain how it calculates program expense percentages.
The use of joint cost allocations can be a contentious one among nonprofit fundraisers. Charity Navigator, often cited as a go-to source on program expense ratios, for a time had not included JCA as part of its charity ratings and has since offered an exemption to charities on its policy.
WWP will no longer base the percentage on its consolidated financial statements, which yielded the 80.6 percent figure, and instead use the Form 990, which does not count donated media as a program expense.
“Although the tax code allows WWP to claim these engagements as program expenses, the endeavor is actually more fundraising in nature than a benefit to veterans. As such its use skews WWP’s reported program expenses,” Grassley said, citing as an example a direct mail acquisition piece that appeared to be “wholly fundraising in nature.”
Doug White, the former director of Columbia University’s fundraising management graduate program, said it seems that Grassley doesn’t think the charity’s board had any responsibility nor does he seem aware of accounting principles laid out by Generally Accepted Accounting Principles (GAAP) or the Internal Revenue Service (IRS). “While he’s been looking closely at charities for many years – which is a good thing – he’s not grasping the real issues in the WWP situation,” White said. “He seems to think the operational aspects needed to be turned around.”
White authored his own report on the WWP fiasco last fall, which was more critical of the five-member board that has since been expanded as part of policy changes.
Grassley also took issue with WWP claiming $65.4 million contributed to its Long-Term Support Trust as a program expense. “That money was merely transferred to that trust and no money was spent on veterans,” he said.
In a statement, WWP said it appreciated the senator’s work on the comprehensive memo and cited the significant changes made over the past year but parted ways on the assessment of the Long-Term Support Trust.
“Currently, no government program exists that allows severely wounded warriors to continue to live in familiar settings and receive care should they lose their caregiver. The trust dedicates funds for the future to ensure care will continue so they can maintain their independence, instead of being place in a nursing home or other institution. We remain firmly committed to serving the long-term needs of those most critically injured, and we follow all IRS and accounting rules in reporting on this program.”
WWP’s independent review last year was not made public at first, only now released by Grassley, who urged more transparency. He also cited a lack of oversight when it comes to WWP’s alumni programs, which often had low rates of participation, sometimes only one or two. Several events, like wine festivals and casino events, “may detract from the mission of offering rehabilitative services and support,” he said.Read more »
- Federal Budget Proposal Cuts Holes In Safety Nets
Leaders from nonprofits across the country are voicing their displeasure with President Donald J. Trump’s fiscal year 2018 federal budget proposal, dubbed “A New Foundation For American Greatness.” Criticisms have specifically centered on cuts to federal safety nets such as Medicaid and food subsidy programs.
The budget proposes $3.6 trillion in cuts over the next decade, according to a copy of the plan available on the White House website. An estimated $610 billion of those cuts are anticipated to come through Medicaid reform. The budget proposes giving states the choice between a per-capita cap and block grant – leaving it to states to prioritize how Medicaid dollars are spent.
Another $250 billion in cuts are proposed in reforms aimed at transitioning away from the Affordable Care Act. The Children’s Health Insurance Program’s (CHIP) long-term future will be tied to health reform as a whole, but funding will be extended through 2019.
Welfare reform is another element of the budget, with the Trump administration seeking to change eligibility for the Supplemental Nutrition Assistance Program (SNAP). The budget proposes a state-match for the cost of SNAP benefits, beginning at a national average of a 10-percent match in 2020 and moving up to a 25-percent average in 2023. In total, the budget projects $190.9 billion in SNAP cuts over the next 10 years.
The proposal would require valid Social Security Numbers to claim Earned Income Tax Credit and Child Tax Credit benefits. Immigration reform is sought as a means of lowering federal expenditures, the budget citing a National Academy of Sciences report that posited that first-generation immigrants might have cost government $279 billion more than taxes paid in 2013, including $147 billion on the federal level.
Relatedly, the budget proposes $71.8 billion in increases to the Department of Homeland Security and Department of Justice for law enforcement, public safety, and immigration enforcement activities and another $300 million to recruit, hire, and train 500 new Border Patrol agents and 1,000 Immigration and Customs Enforcement (ICE) personnel in 2018.
Additional increases include $54 billion in defense spending, including an additional $52 billion for the Department of Defense, up from $587 billion in 2017. Another $2.6 billion has been earmarked for border security, including the planning, design, and construction of a wall along America’s southern border.
The budget next goes before the U.S. Senate for review. Reviews from leaders in the nonprofit community are already in, with numerous organizations crafting statements in opposition to the proposal.
Patriotic Millionaires, a group of high-net-worth individuals, released a one-word statement describing the budget as “obscene.” Daniel J. Cardinali, president and CEO of Independent Sector, stated that the budget signals unprecedented retreats from federal programming aimed at supporting the nation’s most vulnerable populations. Tax reform laid out in the budget also threatens to reduce charitable giving by $13 billion per year.
“As tax and spending debates continue, we urge policymakers to work toward fiscal policies that lift up the inherent value of all individuals, families, and communities,” Cardinali said. “We stand ready to work in partnership with both the Administration and Congress to ensure that our federal fiscal priorities reflect the values and the aspirations of the American people.”
Sameera Hafiz, advocacy director for We Belong Together, a campaign of the National Domestic Workers Alliance, accused Trump of scapegoating immigrants with the plan and using the budget to change laws with which he disagrees, such as federal court rulings against efforts to utilize local jurisdictions in immigration enforcement.
“Low-income women of color, including immigrant women, and their families will be among the most affected by this budget proposal,” Hafiz said in a statement. “Not only will they not have access to these much needed programs to stay healthy and safe, but immigration enforcement will have more resources to conduct raids on communities, detain immigrant women and separate more families.”
Leon W. Russell, chairman of the NAACP, criticized the budget for its potential slashing of federal positions aimed at promoting civil rights and assisting low-income individuals. The cuts would defund at least 10 percent of key civil rights positions across the federal government, according to Russell. Included in that percentage are 7 percent of staff at the Department of Education’s Office for Civil Rights and 249 fulltime positions at the Equal Employment Opportunity Commission. The Legal Services Corporation, which provided 2 million low-income individuals with legal representation in 2016 would also be eliminated, Russell stated.
Concerns at the American Heart Association are focused on the impact the budget will have on medical research. In addition to healthcare reform, the budget proposes $7.2 billion in cuts to the National Institutions of Health, $854 million in cuts to the Food and Drug Administration, and recommends cuts to chronic disease programs at the Centers for Disease Control according to Steven Houser, Ph.D., president.
“Congress needs to increase investment in the NIH and the CDC so their invaluable work can move full speed ahead,” Houser said via a statement. “The association implores lawmakers to reject the President’s proposed NIH budget and to instead provide an additional $2 billion to the agency again this year. This increase will provide a steady, predictable funding stream that would help the NIH prioritize heart and stroke research.”
Casey Harden, interim CEO for YWCA USA, said in a statement that the organization is alarmed by attacks made on women’s reproductive health represented in the budget. A budget expanding access to health care, as opposed to cutting Medicaid and access to reproductive health, is needed, Harden said, along with ensuring basic living standards such as housing and food assistance.
Diana Aviv, CEO of Feeding America, estimated that the cuts to SNAP and shifting costs toward states will equate to 45 billion fewer meals to those in need and would lead to reduced or complete cuts to benefits for millions of families. Cuts to the Emergency Food Assistance Program (TEFAP) will fall below levels authorized by the 2014 Farm Bill, according to Aviv. Total Farm Bill reductions are estimated at $38 billion, according to the budget proposal.
“Without any doubt, our network of 200 food banks will not be able to fill in the gap created by the cuts proposed in this budget,” Aviv said. “We are extremely distressed with this budget. We oppose cuts that undermine the successful anti-hunger and anti-poverty programs. We strongly urge Congress to reject the president’s devastating proposals and develop a budget that keeps critical nutrition and support programs strong.”Read more »
- Red Noses Getting More U.S. Exposure
Red Nose Day USA organizers are looking for the event to be bigger and bolder in Year 3, a strategy becoming of its prime-time television time slot. Increased airtime, a more expansive retail presence, and a social media initiative aimed at converting supporters into fundraisers are among the strategies in place to take the event to another level for its May 25 broadcast on NBC.
“We make it fun to give back, we make it easy,” said Janet Scardino, CEO of Comic Relief Inc., organizer of Red Nose Day USA. “Simple acts of going to a local Walgreens and getting a nose, taking a selfie, doing a fundraiser on Facebook are easy to do. Participation is what we’re focused on — getting more Americans to engage.”
Red Nose Day, which has been a staple in the U.K. for the past three decades, came stateside in 2015. It has since raised $60 million for organizations addressing child poverty, half of funds staying domestically and half going overseas, including $36 million in 2016. Some 20 million Americans engaged with Red Nose Day USA in some way in 2016, according to Scardino, be it on social media, watching the broadcast, donating, or purchasing a red nose and the event garnered 60-percent brand awareness.
The goal this year is to drive deeper engagement and more donations. Social media, where many individuals posted photos of themselves with red noses last year, is one target. The Bill & Melinda Gates Foundation has committed up to $1 million in matching gifts for donations made through Facebook. Options include setting up a Red Nose Day USA donation page, going live on Facebook from a smartphone and adding a Red Nose Day USA donate button, or using #RedNoseDay or #NosesOn in posts to prompt the option of adding a donate button.
The gift match runs through June 15. “We are hopeful that this becomes a game-changer,” Scardino said of Facebook’s fundraising opportunities.
The event’s exposure has also increased. Red Nose Day USA’s presence in Walgreens stores last year – the event’s corporate partner in selling red noses – was 12 feet within seasonal aisles and at cash registers, said Scardino. Red Nose Day USA has neared a full-store takeover this year with 75 brands present in multiple aisles pledging a portion of sales to Red Nose Day, including Coca Cola and Starbucks.
Airtime has similarly expanded, from two hours of primetime in 2016 to three hours in 2017. The on-air content will include a celebrity edition of “American Ninja Warrior” and a special episode of “Running Wild with Bear Grylls” in which Grylls’ and actress Julia Roberts’ adventure will be transporting vaccines to a rural town in Kenya.
Similar messaging on child health and safety will be interwoven throughout the telecast, culminating in “The Red Nose Day Special” hosted by Chris Hardwick at 10 p.m. E.T. The “crown jewel” of the special will be the airing of “Red Nose Day Actually,” a short sequel to the 2003 comedy “Love Actually,” written and directed by Red Nose Day creator Richard Curtis.
“It’s funny and heartwarming,” Scardino said. “It’s a great night of content and a differentiator.”Read more »
- The NPT Honored With Multiple Journalism Awards
The NonProfit Times took home five awards in the Magazine division of the Society of Professional Journalists (SPJ) New Jersey Chapter’s 2017 Excellence in Journalism Awards, recognizing work done in 2016.
There were awards in a variety of divisions and categories announced on Friday. This year’s contest entries were judged by the Michigan SPJ chapter.
The NonProfit Times swept the Business Reporting category. First Place was awarded to Senior Editor Mark Hrywna for his entry, “Wounded Warrior Project Upheaval,” covering the turmoil and turnover that occurred last year at one of the nation’s fastest-growing charities. The judges called the entry an “interesting and original take on the Wounded Warriors [sic] Project’s inability to effectively address criticism of its spending patterns.”
Second Place was awarded to the “2016 NPT 100,” an annual compilation of data from hundreds of nonprofits’ Form 990 to identify and analyze financial trends among the nation’s largest charities. Led by Hrywna, the report included work from correspondents Martin C. Daks and Katherine O’Keefe. Judges described the entry as “important and thorough annual look at trends in large nonprofits.”
Garnering Third Place was an entry by Hrywna titled, “Fright At The Museum,” that revealed a nearly $3-million phishing scam at one of the nation’s largest museums. “Interesting and important short story about a museum and a phishing scam that was revealed in a 990. No one else seems to have covered despite the large dollar amount involved,” according to judges’ comments.
In the Opinion category, Editor-in-Chief Paul Clolery won Second and Third Place awards for his “General Ramblings” column. The entry titled “Transitions Breed Uncertainty” won Second Place, reminding the nation’s nonprofit leaders of the sector’s might and called on them to remain calm during the presidential transition but to be ready for action.
The Third Place prize went to a column titled “It Didn’t Add Up.” Clolery offered his take on the media fiasco surrounding the Wounded Warrior Project and suggested changes by the charity’s board to regain the public’s trust.
There were more than 130 awards in a variety of divisions and categories. This year’s contest entries were judged by the Michigan SPJ chapter.Read more »
- NAACP’s Future To Include Listening Tour, New President
Leaders at the NAACP are preparing to embark on a listening tour to inform the future, more locally focused direction of the organization. Cornell William Brooks, president of the organization for the past three years, will not be joining them. Brooks’ contract, which expires on June 30, will not be renewed, Leon W. Russell, chairman of the NAACP Board of Directors, and Derrick Johnson, vice chairman, told reporters late Friday afternoon.
No timetable has been set in selecting a new president, Johnson said, adding that the organization will “take time” in doing so. Russell and Johnson will run the organization on a daily basis in the interim. The next step, according to Russell, will be to conduct a listening tour, the first in NAACP history, to inform organizational strategy based on the individuals served.
“We have to be local, we have to be strong at the local level,” Russell said. “We believe that we needed some measureable objectives. We understand and appreciate the historic model of protest, but at this point in time, we believe as an organization that we need to retool to be better advocates.”
The organization, as leaders eye future strategy, wants its first step to be toward strengthening local activism, Johnson added, and to be more focused on state policies. The search for a new leader happens to coincide with the organization’s last strategic process coming to a close – accelerating the search for a new organizational direction.
News of Brooks’ departure comes nearly three years to the day that Brooks was announced as the organization’s new president – May 17, 2014. The date coincided with the 60th anniversary of the Brown v. Board of Education Supreme Court decision. Brooks had joined the organization during a turbulent time; the Los Angeles chapter president had recently resigned and the organization announced a 7-percent cut in staffing at its Baltimore, Md. headquarters shortly before Brooks’ arrival.
Prior to coming to the NAACP, Brooks served as president and CEO of the New Jersey Institute for Social Justice. He also served as senior counsel for the Federal Communications Commission (FCC), executive director of the Fair Housing Council of Greater Washington, and a trial attorney with the Lawyer’s Committee for Civil Rights Under Law.
Russell denied that Brooks had previously been told that his contract would be renewed and said that no specific event influenced the decision to not retain Brooks. The move also isn’t indicative of anything wrong at the organization but rather an opportunity to improve, he said. The NAACP’s Executive Committee made the determination that it would be best not to renew the contract, according to Russell. He acknowledged the visibility the NAACP garnered under Brooks, including the 50th anniversary of the Selma march in 2015. “We appreciate him being there for them,” he said of such events.
The NAACP president answers to the board of directors’ 17-person executive committee. The board itself consists of 64 members, Russell said, and will have final say on the selection of a new president as it has in the past, “but that process won’t necessarily look like the same process we’ve used before,” Russell said. A job description for the position is not yet set, with the plan being to discuss the position as a board, gain input, and then feed that input back to the board of directors.
When asked how the NAACP will proceed under his and Johnson’s leadership, Russell indicated that it will be business as usual, with national and local programming already active and in place. No “slowdown” will take place, he said. “I don’t think that this organization, in its 108-year history, has been a one-man operation,” Russell said. “We see that the individual identity is something we need as a leader, but the fact that we made a change doesn’t stop anything. Programming will continue moving forward….We’re not stopping. We’re moving on.”Read more »
- GSUSA Places Rocket Scientist In Captain’s Seat
Sylvia Acevedo will be taking the “interim” out of her title, assuming the role of chief executive officer at Girls Scouts of the USA (GSUSA), the organization has announced. Acevedo served as interim CEO since June 2016 and previously was secretary of the GSUSA Board of Directors and a member of the Executive Committee.
“Girl Scouts has always been an important part of my life, helping me as a young girl to develop the skills to become a leader,” Acevedo said in a statement. “My focus [at GSUSA] has been to raise the profile of the Girl Scout movement and mission, with the targeted aim to grow membership. So I am excited to be able to move forward with the initiatives I launched with my colleagues over the past year, and to keep our momentum going strong.”
If maintaining momentum proves to be akin to rocket science, Acevedo will be well prepared. Her background is in engineering and she has worked for NASA’s Jet Propulsion Laboratories, IBM, and Dell. Acevedo has also worked as a technology consultant for companies seeking to capitalize on demographic trends and was formerly CEO of Communicard LLC, a technology firm.
An advocate for science, technology, engineering, and mathematics (STEM) education for young women, Acevedo is expected to help expand external support for GSUSA’s STEM programming, including in Silicon Valley. She has also served as the board chair for the Austin Community Foundation and is a White House commissioner on the Presidential Initiative for Hispanic Educational Excellence.
A native of Las Cruces, N.M., Acevedo started off as a Brownie in her home community, according to past reports, and most enjoyed earning her bicycling badge. After Girl Scouts, she earned a master’s degree in engineering from Stanford University – launching her career in the STEM field.
Acevedo replaces Anna Mara Chávez, who was at the helm of Girl Scouts for five years, beginning in 2011. Chávez’s tenure was marked with major shifts in the organization, including turnover at executive and development positions and a voluntary separation incentive program that sought to reduce staff at headquarters in New York City, on the heels of a consolidation of 312 councils to 110. Chávez resigned last June to explore opportunities in the public sector. She recently was announced as the new chief strategy officer and senior vice president for external affairs for the Arlington, Va.-based National Council on Aging (NCOA).
GSUSA reported revenues of $94.7 million on its 2015 Form 990, the most recent year available. The figure represented a slight increase from the $94.5 million reported in 2014 and $90.4 million reported in 2013, but far behind the $105.2 million reported for 2012.Read more »
- Robin Hood Gala Tops $54 Million
The Robin Hood Foundation raised $54.5 million Tuesday night during its annual benefit at the Javits Center in New York City. The event, hosted by “Good Morning America” co-anchor and former NFL star Michael Strahan, featured performances from Chris Martin and Jonny Buckland of Coldplay, Miley Cyrus, and Dave Chapelle in for 4,000 attendees.
Unlike in past years, where a portion of donations were earmarked for a particular initiative, the dollars raised during this year’s benefit will go toward core programmatic work, according to a spokesperson for Robin Hood. All funds raised will go toward the feeding, housing, educating, caring and training of low-income individuals, the foundation partnering and funding more than 200 New York nonprofits. Robin Hood’s board underwrites all operating costs.
“The momentum this evening was extraordinary,” said Wes Moore, CEO of Robin Hood. “I think it’s safe to say we’re all energized to carry this forward to dig into the incredible work that lies ahead.”
The night was highlighted by a $15 million challenge by Chicago-based philanthropist Ken Griffin, founder and CEO of Citadel. Griffin is the first Robin Hood supporter to ever make multiple challenge grants to benefit the organization, having previously done so in 2001. Live pledges and table sales exceeded Griffin’s pledge total – bringing the evening’s total to $54.5 million and the organization’s all-time fundraising total to $2.5 billion.
The total itself is the event’s lowest in more than five years, when it raised $46.8 million in 2011, also trailing the $61.2 million raised last year; $101.7 million in 2015; $60 million in 2014; $81 million in 2013, and $57 million in 2012.
A spokesperson said for the Manhattan-based poverty fighting charity said that Robin Hood is unable to pinpoint a cause for year-to-year fluctuation given the differences between the events year to year.
In addition to Tuesday night’s benefit, Robin Hood announced a partnership with GREATS to create limited-edition GREATS x Robin Hood sneakers, currently selling for $179 with all proceeds going to benefit the organization. Five hundred pairs of the sneakers have been made, according to the spokesperson.Read more »
- WWP Revenue Declined 20% After Controversy
Contributions to Wounded Warrior Project (WWP) dropped almost 20 percent last year but future declines could be more precipitous given the timing of the charity’s fiscal year.
WWP reported $321.8 million in total revenue according to its Internal Revenue Service (IRS) Form 990 for the Fiscal Year Ending September 2016, filed this past April 4 and posted on the organization’s website. That’s down more than 19 percent from $398.6 million reported for the year ending September 2015.
Virtually every revenue category on the Form 990 reported a decline from 2015 to 2016:
- Federated campaigns, -18 percent, to $3.8 million;
- Fundraising events, -96 percent, $49,931;
- Noncash contributions, -32 percent, $3.7 million;
- Royalties, -14 percent, $9.6 million; and,
- Investment income, -46 percent, $7.2 million.
Weeks after stories in The New York Times and on CBS News, Chief Executive Officer Steven Nardizzi and Chief Operating Officer Al Giordano were fired and WWP instituted changes to certain policies and procedures but found no wrongdoing in an audit by attorneys and accounts. Another study by nonprofit expert Doug White also found no illegalities but took issue with some of the board’s handling of the crisis, as well as the media’s coverage.
White, the former director of Columbia University’s fundraising management graduate program, expects the 2017 Form 990 to look worse. “I believe it will continue to go down before it goes up,” said White, who last year authored a report about the turmoil and decisions made at WWP after the controversy. The loss in revenue could have looked greater if annualized because it was the second half of the year when the drop took place, he added.
Negative media attention hit the Jacksonville, Fla.-based organization in early 2016, after the holiday giving season, which is typically the busiest time of year for fundraisers and within the first quarter of the charity’s fiscal year. This past holiday season would have been the first since the turmoil and executive turnover at WWP and won’t be revealed publicly until the next tax form, likely filed in April 2018.
A spokeswoman for WWP said via email that the organization is “ahead of projections” so far in the middle of this fiscal year. The organization does not release annual revenue results until the fiscal year is over and auditors complete their annual audit work.
On the expense side, programs took the brunt of the cuts, down $49 million, almost 19 percent, to $213 million. Expenses attributed to direct response television (DRTV) and online saw a reduction of 53 percent, declining from $36 million to $16.6 million. On the balance sheet, net assets were up 11 percent, to $314 million, including unrestricted net assets of $308 million.
The organization announced widespread cuts toward the end of the most recent fiscal year, September 2016, including 15 percent of its 600-person workforce and almost half of its executive staff. Retired Army Lt. Gen. Michael Linnington, who took over as CEO in July, said at the time that the moves were aimed at consolidating “operations to reduce administrative costs and streamline the workforce to focus on areas identified as greatest in need.”
Staff reductions were mostly in health and wellness programs, including cutting a Soldier Ride team, eliminating the Transition Training Academy (TAA), and closing nine offices. New positions were added within mental health. Declines of 56 percent in office expenses and 45 percent in travel expenses were attributed to cutbacks announced in September.
At the time of the layoff announcement, Linnington estimated that the year’s revenue total would be about 75 percent of the previous year, or about $300 million, disputing estimates by Nardizzi at the time of more like $200 million. The difference in those estimates could be based in how one takes into account the fiscal or calendar year.
White noted that direct response television (DRTV) ads for the charity are “a lot less edgy,” and direct mail that he has seen does not include the logo or the fact that the piece comes from WWP. DRTV was one of the largest investments and fundraising tools, powering one of the fastest-growing charities in the country the past several years.
WWP had pulled DRTV ads in the wake of the negative media coverage. That could have an impact on acquisition and the donor pipeline in the near future, which would affect revenue in the coming years. New DRTV spots also seemed to have toned down the emotional appeal of previous ads.
White would expect other veterans’ nonprofits to try to cut into WWP’s market share but their mission is so broad, with such a long-term horizon, it remains to be seen if any other veterans’ organization is “fiscally capable of undertaking that.” Another organization to step up would need a much more vigorous profile and expansive mission, he added.
“I do feel that they’re a great organization and hoping the leadership is able to bring it back,” White said.
The timing of the fiscal year in relation to the controversy and the change in leadership that occurred after financials closed make it more difficult to assess the financials, according to Brian Mittendorf, a professor of accounting at Ohio State University’s Fisher College of Business, who followed the charity’s saga.
“The drop in contributions is less than many expected but we’re only really know after we see a full-year’s financial statements, post-controversy,” he said, adding that a 20-percent decline would reflect a 40-percent annualized decline if funds come in evenly across the fiscal year. “Especially given they had been raising more than spending for some time, the fallout seems manageable,” he said.
Net assets went up and with more than $400 million in unrestricted net assets, Mittendorf said, “the level of financial cushion is substantial.”Read more »
- Universal Deduction Might Boost Giving
Charitable giving could take a hit of between $5 billion and $13 billion under current tax reform proposals by Republican lawmakers but another policy change could make up that difference and then some, according to a new study released today.
In a white paper titled “Tax Policy and Charitable Giving,” commissioned by Independent Sector and conducted by the Indiana University Lilly Family School of Philanthropy, making the charitable deduction universal for all taxpayers would not only erase the potential $13-billion drop in donations but increase giving by as much as $1.1 billion to $4.8 billion.
President Donald J. Trump’s initial tax reform outline proposed doubling the standard deduction for individuals to $12,600 ($24,000 for joint filers) and reducing seven tax brackets to three (10 percent, 25 percent and 35 percent).
While overall giving could decline between 1.7 percent and 4.6 percent, increasing the standard deduction could have a bigger impact on giving to religious organizations than other charities, reducing giving by 4.7 percent as compared to 4.4 percent to other organizations.
Americans donated $373.25 billion to charities during the 2015, the most recent year for which data are available from Giving USA. Taxpayers who itemize are far more likely to donate to charity and high-income taxpayers are much more likely to itemize.
Expanding the charitable deduction to non-itemizers as a stand-alone provision increases total giving by between 1.3 percent and 4.3 percent, and has a negligible effect on tax revenue (-0.41 percent to -0.47 percent). All policies have a negative impact on federal tax revenue, an estimated decrease of 3.8 percent when all three are combined.
“We took the position last year that expanding the charitable deduction to 100 percent of taxpayers would encourage all Americans to give more and ensure that more dollars were being put back into communities,” IS President and CEO Daniel Cardinali said in a press release announcing the study’s results. “We are encouraged that the research shows that expanding the deduction has the potential to more than offset the estimated loss in charitable dollars resulting from current reform proposals,” he said.
The new study used the “2014 Tax Reform Act” introduced by then-House Ways and Means Committee Chairman Dave Camp (R-Mich.) to estimate potential effects of tax policies on charitable giving. The White House outline released last month and the House Tax Reform Blueprint from last summer both closely match the Camp legislation in reducing marginal tax rates and increasing the standard deduction. Currently, the standard deduction stands at $6,300 for individuals and $24,000 for joint filers; the Camp proposal called for $11,000 and $22,000 and mirrors the three tax brackets in the White House plan.
The study also uses data from the University of Michigan’s Study of Income Dynamics, the Philanthropy Panel Study created by the Lilly School, and the 2009 Internal Revenue Service (IRS) Statistics of Income Public Use File. The paper expands upon an Urban-Brookings Tax Policy Center study in October by examining the expansion of the charitable deduction to non-itemizers as an addition to the current proposals to increase the standard deduction and decrease the top marginal tax rate.
“When talking about changes in tax policy, it is important that the debate is informed by research. This study provides important information about the expected effects of the proposed tax policy changes and the extension of the charitable deduction to non-itemizers,” said Patrick Rooney, associate dean for academic affairs and research at the Lilly Family School of Philanthropy.
The tax reform blue print from the administration and Republican lawmakers appears to preserve the charitable deduction but there are unintended consequences of reducing the incentive for charitable giving, said Susan Dreyfus, chairman of Leadership 18 and president and CEO of the Alliance for Strong Families and Communities. “Fortunately, this study provides data that indicates there is a simple fix. By making the charitable deduction available to all, including non-itemizers, the incentive to give will be preserved,” she said in a press release announcing the results.Read more »
- How To Kill Your Program
Some institutions seem bent on making sure their estate giving programs don’t grow and thrive. While reasons for marginalizing estate giving donors and treating them as if they don’t matter aren’t clear, these are highly effective strategies for discouraging planned gifts.
It might take some work, but if you are trying to kill your estate giving program — perhaps permanently — do the following.
Tell your planned giving donors and prospects their gifts aren’t “real money.” Even if you don’t say it to their face, say it to your board and staff. This will ensure that those closest to you never consider an estate gift or tell their friends and family this kind of giving is important.
Put estate donors only in a separate giving category. Never list them with other “champion” or “platinum” level donors. And, don’t differentiate between a $1 million estate gift and $10,000 gift.
When a donor makes an estate gift, treat it like a transaction. Don’t communicate with or reach out to them after they have made an estate gift. Don’t invite them to your donor appreciation events.
Always qualify their gift by telling people they gave $X in their estate. No matter what, don’t just say they made a gift of $X. Always stress the terms of their gift, rather than the gift itself.
At all times, reinforce the message that their gifts don’t count. Don’t invite them to serve in leadership positions or come onsite to learn about new programs.
When you solicit estate gift prospects, talk about how they will make their gift, not the impact it will have. Use compelling, meaningful language and pictures of those impacted by philanthropy only with cash and pledge gifts. In fact, create an entire newsletter about “real giving,” then put a small picture of an estate gift donor on the back page and talk about a charitable remainder trust or gift annuity. Make it sound complicated.
When you receive a realized estate gift, talk about your donor in a disparaging way. Gossip, if you can. If you receive an estate gift from a person you don’t know, don’t kick yourself for a missed opportunity to know them and to make their lives more meaningful. Instead, laugh about it and treat it as if you won the lottery.
Only talk to people 80 and older about estate gifts. Make sure everyone who is in your legacy society is 80 or older, and only acknowledge them once a year.
Wait until they are gone to celebrate or put their name on the donor wall, and make sure it is in a dark hall.
Now . . . if you are one of the fundraisers who sees the value in a vibrant, “alive” estate giving program that will reap huge rewards, you will obviously want to disregard the previous tips and pay close attention to the following.
Think of planned giving the same way you do major gifts and treat prospects with the same care, attention and strategies. Identify and qualify your prospects by considering their interest and gift potential, including cash, pledge and estate if appropriate. For instance, a prospect with a gift potential of $250,000 might be one who could make a $25,000 cash gift now, $100,000 pledge over the next four years, and $125,000 via the estate.
Listen to your planned giving prospect. Take the time to get to know them. Learn their story, what they care about, and what concerns them.
When it is time, ask for the gift the same way you would any other prospect. Develop a unique solicitation strategy and ask for a specific amount. Set a time and have the right person ask. Tie what the prospect cares about to impact the gift will have for the cause. Make sure you use the word “gift.” This implies you will be grateful.
Celebrate when the donor makes a planned gift. Thank the donor and have a board member or two call. With permission, publish the name under the appropriate giving category as you would any other gift. According to your recognition policy, announce the gift and involve family members.
Any time you can, make sure your donor knows how meaningful this gift will be to those whose lives will be impacted. Communicate with them often, invite them to be a part of the life of the institution. Assume that they care.
Tell your planned gift donor you want to meet with them annually. Not only will this ensure your gift remains in their estate, but it provides that excuse all major gift fundraisers seek — to spend time with their donors. At this annual meeting, share the exciting news happening at your institution now. When they say you don’t need to meet with them, if appropriate, insist. Assure them you enjoy their company and the opportunity to share, and to let them know how important they are to your institution.
Treat everyone like they are a prospect. Board members, staff, family, neighbors, friends — everyone. Those who are 55-65 are the best estate giving candidates, as they have likely not yet decided where their planned gifts will go, and are more likely to give generously.
Building and nurturing a strong planned giving program is one of the best ways to grow philanthropy for your organization. You might already know who your prospects are and you already have the skills. You know what you need to know if you have been developing relationships and soliciting gifts face-to-face.
You might still want to separate your estate giving solicitation and appreciation strategies. But before you defend that line, ask yourself: What is the worst thing that can happen if your planned gift donors feel valued and appreciated, and drawn even closer to the life of your institution during their lifetimes?
*Karin Cox is senior executive vice president and chief creative officer of Hartsook Fundraising Counsel Worldwide. Her email is firstname.lastname@example.orgRead more »