There has been a lot of hand-wringing in the last few weeks about how the 2017 tax law changes are starting to impact nonprofits. The fear is that with an increase in the standard deduction fewer Americans will itemize their taxes and thus be less willing to donate to nonprofits (because the charitable deduction tax incentives have essentially disappeared).
But in agonizing over this shift, we are doing what we so often do when it comes to the nonprofit sector — taking a scarcity, as opposed to an abundance, approach.
When faced with a challenge there are always two choices:
- focus on the hurdle standing in the way, or
- figure out a way around it.
I see the stark choice between these two paths right now in the journalism space, where I am working with several nonprofits. The news media has been hit hard in the last 10 years with struggling business models, extensive layoffs, and attacks from our highest political office. While some news organizations have buried their heads in the sand and become increasingly irrelevant, others have instead embraced these shocks as opportunities. Some, like the Texas Tribune have completely reinvented the news organization model and made it an engaging, financially sustainable, democracy-supporting nonprofit institution that is currently flourishing.
The problem with scarcity thinking is that it strips you of the most powerful tool that you as a social change leader have at your disposal: belief — belief that change is possible, belief that you can achieve that change, and belief that money, supporters, advocates, people will follow where you lead.
If in driving fear into the hearts of our nonprofit leaders we cut off this most powerful of allies then we are all sunk.
So I wonder if we in the nonprofit and philanthropic sectors could take an abundance approach to what is understandably a potentially fear-inducing shock — a dramatic change in the incentives to financially support the nonprofit sector. Itemized deductions were one of the historic incentives for charitable giving. Perhaps we need to create new incentives for investing in the nonprofit sector. Maybe this shift in the tax law will encourage innovative ways to create financially sustainable social change efforts. Maybe this tax law shock is exactly what the nonprofit sector needs to reinvent how it is financed.
The challenge — or really the opportunity — is to embrace this change. And I mean truly embrace it. Yes, the fact is that getting a lower tax bill is no longer the incentive it once was for making a donation to a nonprofit. So in the face of that change it is now up to innovative, abundance-embracing nonprofit and philanthropic leaders to forge new paths. Isn’t it precisely that belief that something better is out there that has always propelled innovation…in every, single instance?
Perhaps the pre-2017 charitable deduction tax law was a relic from a time when supporting “charity” was an after-thought. Maybe this change is precisely the impetus we need as a social sector to finally figure out how to effectively and sustainably finance the kind of lasting, social change we seek. Perhaps we are moving to a system where significant and sustainable investment in our social sector becomes a daily — not just an April 15th — endeavor.
Photo Credit: Evan Kirby