by Kris Kindelsperger
For nonprofits and donors alike the signs are promising. The Dow has passed 12,000, a wide range of economic indicators are improving, corporate profits are strong for many companies, and many have recovered much of their personal wealth.
Yet, despite all these positive indicators, the news that may have the most important impact on philanthropy may be two years of certainty about key tax issues.
The psychology of giving is complex, but clearly in times of significant recession many individuals had fewer resources with which to fund their philanthropy.
But, despite signs of recovery in the 3rd and 4th quarters of 2010, donors seemed to lack confidence in a sustained recovery, and thus were reluctant to make significant philanthropic commitments, as evidenced in a recent Chronicle of Philanthropy study that showed giving by the biggest donors was down significantly in 2010.
One obstacle was the fear that proposals by some in the house and senate would result in significant changes to personal income and estate tax policy, which would wipe out the gains many were making.
Congress resolved these fears, at least for two years. The psychology of this, many believe, will lead to clarity and confidence, something that has been missing for some time. This recent New York Times article examines in great detail the impact the deal could have for charities in the short term.
Our recommendation? Gift officers should test the concept of the “two year window of opportunity” with prospects. For the next two years donors can make significant philanthropic commitments knowing exactly the tax consequences.
Will two years of certainty fuel 2011 giving? We think so. What does it look like from your vantage point?