In April of this year, The AFP Fundraising Effectiveness Project reported that the dataset of XXXXX gift transactions witnessed a 10% decline in the number of donors year over year and a 1.7% decline in dollars. This June, Giving USA reported that when adjusted for inflation, charitable giving while at $499 Billion, declined 10.5% from record years in 2021 and 2020 – when the world was dealing with Covid and an economic shut down.

What’s going on? Are we really becoming less generous as a nation? We serve on the boards of both organizations, have a background in analytics and business intelligence – and our firm is dedicated to expanding generosity. So, we took another look at non-tax-deductible expressions of benevolence What did we find? Crowdfunding is exploding.

Go Fund Me alone managed over 25 Billion in transactions. But know what the woman who lost her husband in a horrific car accident, or the young woman requiring a costly life-flight, or the family that lost the roof off their house during Hurricane Ian – all had Go Fund Me accounts, and we are certain the people who responded to the stories responded with thoughts of generosity and charity. But those gifts did NOT go to a traditional charity, can not be deducted on an itemized tax form, and do not register as “charitable gifts.”

Similarly – people are investing in a more socially conscious way – Venture Capital Funds are targeting minority owned, BIPOC businesses and entrepreneurial efforts that have previously escaped the interest of “trendy, high-tech VC” companies and hedge funds. This is called impact investing. It was interesting to see the people who manage the chartable giving at Huntington Bank invest in the Minneapolis based Brown Venture Capital – as did the Bush Foundation – itself a 501 (c) 3 – why? Because Brown extends opportunity to those who might not otherwise receive it – for the common good, and benefit of all.

These dollars might have gone to charity, instead they were directed to impact investing. Over $1.1 Trillion was under management in impact investing funds. Like Steve Jobs – who believed the best form of charity was to provide someone with an opportunity to make a living – with a good job – Mark Zuckerberg and his wife Chan, decided to invest in an LLC – to promote socially responsible entrepreneurship. $98 Billion in Meta stock was pledged to this enterprise. This past year we witnessed the owners of Patagonia transfer 98% of the company stock into a 501 (c) 4. Why – so the focus of the firm’s profitability can remain on influencing environmental policy.

Gifts to 501 (c) 4 are NOT tax-deductible as is a 501 (c) 3, yet one can argue that the focus of an advocacy agency remains on improving the quality of life and common good. At Visionary Philanthropic Consulting, we see these data points as blurring the lines between charity and benevolence. They also increase the competition for the charitable dollar beyond the nearly 400,000 new nonprofits established in just the last 10 years. It is our nature to go where the empirical evidence leads us.

In the nonprofit world, it is time to reexamine our donors, our mission, our impact and our methodology and create a new paradox. For more information, link to our Webinar on the topic and talk to one of the experts at VPC to explore what you can do in the new dynamic environment.

Scott R. Lange

Founder & President