The ways in which both prominent philanthropists and ordinary people donate has changed rapidly in the past few years. Moving into 2019, strategies and trends will continue to shift. Understanding the changes that will likely occur and the issues underlying the new approaches to giving can help nonprofits more effectively appeal to donors and help donors become more strategic about the causes they support. This year, differences in tax law and technology, not to mention changing social mores, will drive many of the trends that industry experts expect to see. Some of the major changes predicted for philanthropy in 2019 include:
Investing for social benefit
A number of modern donors are discovering opportunities to earn a return on their money while also supporting a charitable cause. So-called impact investing has become increasingly popular as more companies adopt a social mission. Millennials have largely driven this development as investors, customers, and employees clearly see true value in socially responsible companies. From a donor’s perspective, seeing even a small investment multiply while supporting an important social cause is the best possible outcome. As more entrepreneurs create companies that push a social agenda while also turning a profit, donors will likely continue to invest in these ideas.
Giving more, but less frequently
Nonprofits across the country are waiting to see whether the Tax Cuts and Jobs Act of 2017 changes when and how much people give, since the standard deduction has been doubled, thereby eliminating many of the tax benefits of donations. Some experts believe that this new law will cause “bunching,” meaning that people will donate every two or three years in larger amounts so that they can itemize in that particular year and then take the standard deduction on other occasions. However, this will apply more to people who were giving in calculated ways as a means of reducing their tax burden. Giving patterns this year may shed more light on how people will donate in the years to come.
Emphasizing the importance of transparency
The concept of transparency has gained momentum in the past few years, but moving forward it may become a key determinant for donors. More people than ever before want to know exactly where their donations will go and what effect they will have. Donor due diligence has become more critical as donors, especially younger ones, seek to have a larger personal involvement in the causes they support. Donors are more willing than ever before to invest time researching an organization’s governance policies, leadership, and past financial statements. Accordingly, more tools have become available online to help in this process.
Growing role of technology
Crowdfunding and peer-to-peer funding have grown in popularity over the past couple of years. You may have noticed more notifications in your Facebook feed about people raising money for a certain cause, and it seems like this trend is here to stay. The growth will likely continue because it represents two different trends: the desire to personalize giving and the technological advances that make it easier than ever to donate and ask others to do the same. In some sense, this type of recommendation or testimony is another way for people to help a cause, outside of donating time and money. Increasing awareness of a cause can ultimately generate a lot more support for it than making a private donation.
Donating more to political causes
As candidates begin to throw their hat in the ring for the 2020 election, more donors will begin to rally around these individuals and other political causes. Along the same vein, expect to see more donations related to the big social causes that are likely to become major issues in the election—think topics like housing and healthcare. Politically motivated giving surged in 2017 and 2018 because of the polarizing effect of President Trump, and this trend will only grow stronger as people seek to show their support for or opposition to his policies. While direct campaign donations will definitely increase, it will be interesting to see what kind of support goes to the issues, rather than the candidates. Some industry experts have also predicted that we may see new, tax-deductible options for donating to organizations that align with campaign issues.
Fighting global warming
While global warming has been a hot topic for a number of years, people in the United States are beginning to notice the effects of disruptive climate change, and a wide range of philanthropists have refocused their efforts on this issue. In September 2018, 29 donors banded together to pledge $4 billion to address climate change, which represents the largest philanthropic donation dedicated to this problem. In addition, a number of new nonprofit organizations have begun to work to minimize further damage to the environment, and they are attracting diverse donors. Furthermore, a handful of major foundations have made global warming a primary issue of concern, including the Hewlett Foundation.