Fundraising in an Era of Widening Wealth Disparity Association of Fundraising Professionals of Northern New England Stowe, Vermont November 8, 2018 Alan Cantor

First, an admission.

Second, a disclaimer.

Three overlapping concerns about the widening wealth inequality: What’s the impact on society, the economy, and democracy? What’s the impact on nonprofit priorities? How should we adjust our fundraising strategies?

The rich are getting richer.

Wealth Distribution: “Pietopia”

Wealth Distribution: Ideal

Wealth Distribution: Actual, as of 2017

Wealth Distribution: Focus on top 1%

And good jobs in the middle are going away. Union membership lowest since the 1930s

And good jobs in the middle are going away. Union membership lowest since 1930s Manufacturing  Developing countries Cab drivers  Uber/Lyft Unionized hotel staff  AirBNB Your local accountant  TurboTax Technology/“disruption” is making a few people rich and many people poorer.

Anxiety is growing in the upper middle class Worries about health care Worries about education costs for kids Worries about retirement Worries about Trump/politics

Wealth disparity is amplified by tax deductions favoring the wealthiest IRAs/401(k)s Mortgage interest Depreciation for real estate investors

Wealth disparity is made worse by the new tax law Doubling of standard deductions to $12,000/individual and $24,000/couple Now, itemized deductions ONLY for the top 5% 95% of your possible donors now get NO charitable deduction on federal income taxes.

What’s this mean for development? 1985: “The 80/20 Rule” 2005: “The 90/10 Rule” 2018: 95/5, heading toward 98/2

What’s this mean for development? 2018: 95/5, heading toward 98/2

What’s this mean for development? A few donors can take on a dominant role. (For your organization, and for society!) “Philanthropy is a delivery system for massive plutocratic amplification.” – Prof. Rob Reich, Stanford University Can being “donor-centric” go too far?

What’s this mean for development? Huge competition with private foundations and donor-advised funds.

“Democratization of philanthropy.”

“The average DAF donor is a member of the top tenth of the top 1 percent of the population. This group includes just 234,000 people who each make at least $1.96 million annually in total household income.” -- James Andreoni Professor of Economics University of California, San Diego

As wealthy donors grow more influential, mid-sized donors are disappearing.

Amount contributed by donors <$10,000, compared with labor force participation

Amount contributed by donors <$10,000, compared with home ownership rate

Fewer Americans are charitable at every age level!

Share of Americans Giving to Charity THEN NOW THEN NOW

Many people lost the habit of giving to charity in the Great Recession, and haven’t returned. THEN NOW THEN NOW

Early returns for 2018: Not encouraging. According to the Chronicle of Philanthropy, donations down 2% in first six months NUMBER of donors down 6%

If you really want to get depressed: Anand Giradharadas: “Winners Take All” “The economic elite want change, so long as nothing changes.” Jane Mayer: “Dark Money” “Weaponized Philanthropy.”

So, again: What’s this mean for development? 2018: 95/5, heading toward 98/2 It’s about appreciated assets. It’s about donor-advised funds and foundations (and bunching charitable giving). It’s about a few donors having greater influence. And it’s about nonprofits making choices.

Charitable organizations traditionally have wanted: A broad base of donors Major gifts Do we have to adjust the balance? Do we have to focus differently?

Behavioral economics speaks to the importance of “anchor points.” The number you first see, from which you will drift… a bit. When we go on a nonprofit website, and go to make a gift, what’s the first number we see?

We need to focus our asks and maximize our thanks! So why do we ask our $5,000 donor to also be a $50 member? Or to sign up for Amazon Smile?

When we want and need major gifts, why do we pester our largest donors with requests? Or to eat at a certain restaurant on a certain night? Or to buy raffle tickets? Or to sponsor 5k races? Or…

When we want and need major gifts, why do we pester our largest donors with requests? … buy shopping bags… Or…

When we want and need major gifts, why do we pester our largest donors with requests? … Buy steaks?!

What’s this mean for development? Do we need to shift the balance? Charitable organizations want: A broad base of donors Membership Annual appeals Road races Auctions Raffles Gimmicks b) Major gifts Leadership gifts Capital campaign gifts Planned gifts (All of major size)

Which means dropping certain activities! Do we need to shift the balance? Charitable organizations want: A broad base of donors Membership Annual appeals Road races Auctions Raffles Gimmicks b) Major gifts Leadership gifts Capital campaign gifts Planned gifts (All of major size) X X X X X

So first: Observations, questions, and comments! Small Group discussion: What resonated with you/your organization? What didn’t? What are you doing, consciously or unconsciously, to recognize the wealth inequality? What SHOULD you be doing?

Large Group Discussion What resonated with you/your organization? What didn’t? What are you doing, consciously or unconsciously, to recognize the wealth inequality? What SHOULD you be doing?

What will you do on Monday, and a month from Monday, about this issue?

Fundraising in an Era of Widening Wealth Disparity Thank you!