The Rundown - Gazing into the Crystal Ball - January 27, 2023
If it's January, it must mean it's time to think about what the new year will look like
fGazing into the Future
January is the mark of the new calendar year, for many of us, a new fiscal year and a time to think about what the next twelve months will bring. And as much as we might want to try to predict the future, twelve months is a long time and things can turn on a dime. Former British Prime Minister Harold Macmillan was once asked what the most troubling problem of his leadership role was, his answer was succinct: “Events, my dear boy, events”. Same holds true for the nonprofit and philanthropy worlds as well. Our worlds move fast and how many times have we said to ourselves, “Well, I didn’t see that coming.” I’ll admit, for me more than once.
Yet, there is a need to spill ink and devote bytes to the thoughts and ideas of those that look into the future and Eileen Hesiman, writing for Forbes has given her insights on what the new year might look like. You can read her piece here.
Heisman points out that philanthropy this year will focus on four main pillars: donors will want to right wrongs, funders will be moving past metrics, organizations will be searching for stability and more everyone will be experiencing more confusion. Not exactly a sunny outlook, but let’s dive in.
Righting the Wrongs of the Past
Heisman’s first prediction is that people will increase giving to those organizations that are fighting hate.
In 2023, I predict donors will increase their giving to a pressing crisis: the alarming increase in hate speech and hate-fueled violence around the world. Intolerance and hatred in all its forms—from longstanding systemic racism and misogyny to more recent spikes in violence against Asian Americans and antisemitic hate crimes—must be challenged at every turn.
This isn’t as much of a bold prediction as it is a basic axiom of philanthropic giving, people give to causes that are important to them. As we see the stories of violence against individuals and groups based solely on their social characteristics, it stands to reason that giving to these groups will increase. As a society, we are getting to the point where we are generations removed from the civil rights turmoil of the 1950s and 1960s and those audiences for tolerance and acceptance have grown mightily since those times. Yet, there is still more progress to be made. As long as their stories to tell of injustice, there will be those willing to give.
Moving Past Data
Another point that Heisman makes is that donors will balance data and emotions when it comes to giving.
Predicting more giving based on emotions has an “equal and opposite reaction”—less giving based on data alone. In the most extreme interpretations, movements like effective altruism (EA) separate donors’ emotions from issues and place a premium on exclusively giving by metrics. I predict EA and other similar philosophies that are overly reliant on data will “regress to the mean” as donors need to employ multiple tools to evaluate which charities and causes are worthy of their support.
It’s not say effective alturism is on the way out, but it certainly has been given a bad reputation lately, namely because the champions of the cause have been made out to be untrustworthy and fraudulent (does the name Sam Bankman-Fried mean anything? We explored his FTX Crypto meltdown in a past Rundown.
But, most of this is already known by philanthropic and nonprofit leaders. People give to people and people are made largely of stories and not data. The numbers are nice, but the stories sell.
Searching for Stability
Heisman makes the point that the next year, organizations will continue to search for stable forms of giving to their organization. She brings up the value of Donor Advised Funds as a strong tool for donors and organizations.
Donors with giving vehicles, like donor-advised funds (DAFs) or private foundations, can be a stabilizing force when market fluctuations impact individual giving. Historically, in periods of recession, total giving declines, but giving rates from DAFs remain remarkably consistent, above 20% of total charitable assets. This happens because donors who use giving vehicles have already donated their assets and received their tax deductions. Since they are not gifting from personal assets, they can give more consistently across economic cycles. Donors have been sustainable sources of support for charitable organizations during times of market volatility—and I predict they will be again.
Donor Advised Funds are wonderful tools and help people plan their giving in a more consistent way. Full disclosure: I give all my charitable giving through a Donor Advised Fund that I have with Fidelity Charitable. These funds are easy to set up and are becoming more commonplace across different economic classes, in other words, they are no longer the realm of high-wealth households.
Cash is King
Finally, Heisman makes the point that cash is still going to be king when it comes to donating assets. Charitable gifts of stocks, bonds and real estate will still occur and gifts of more unstable assets like cryptocurrency will probably fall off.
I predict donors will take a "wait-and-see" approach before they make a major gift this year. I also expect to see more cash donations than complex assets if markets continue to decline. Charitable gifts of securities and complex assets, like real estate and cryptocurrency, have been on the rise in recent years as the markets posted record highs. Donating appreciated complex assets to charities can offer donors a tax advantage by eliminating (or reducing) capital gains tax. Losses in the value of complex assets—whether from declines in the traditional stock market or the reduced value of cryptocurrency (a likely outcome after the downfall of FTX)—will make those gifts less tax advantageous for donors.
I have always advised nonprofit and philanthropy leaders to stay away from cryptocurrency and other exotic assets if you do not have a firm grasp and understanding of what they are and how they work. Rarely does volatility and mysticism lead to an outcome that is going to gain sustainable and long-term appreciation for our organizations. We explored the topic here:
The Weekly Notebook
A quick rundown of what I am seeing and hearing in the nonprofit world….
Now Hiring!
I have a nonprofit in Sidney, Ohio that has reached out to me looking for a new Executive Director. I can tell you that this a very strong organization that needs leadership that has strong entrepreneurial and staff management skills. If you have any interest, please drop me a line at pinnaclestrategiesltd@gmail.com and let’s talk!
Also, the local CASA/GAL agency in Troy, Ohio is looking for a new staff member as well. It’s a great agency with solid leadership. If you have interest, please let me know by sending an email to pinnaclestrategiesltd@gmail.com and I will share what I know.
What Can We Work on Together?
Did you know that Pinnacle Strategies works individually with nonprofit and public sector leaders to help them solve problems, achieve goals and gain confidence in their roles?
Why?
Because, this work is hard and it’s often a lonely road. Our nonprofit and public sector leaders need people that they can talk to to get solid advice and encouragement to do the work that is in front of them. If you feel that this can be of value to you, or a member of your team, please reach out to pinnaclestrategiesltd@gmail.com and let’s talk.
We Finally Hit 500!
This past week we finally hit 500 subscribers! It took way longer than I had hoped, but the beauty of this newsletter is that people are continuing to find value and they are reaching out to me and we are building a strong community here! Thank you all very much!
If you are finding value, please don’t hesitate to share this newsletter with your friends and colleagues.
Ready to Learn Something New?
One of the prettiest cities in the Midwest is Indianapolis and travelling there can open a perfect opportunity to sharpen your skills and meet new professionals in the field. I would encourage you to look at some of the offerings of The Fund Raising School at the Lilly School of Philanthropy at Indiana University’s campus in Indianapolis. The professional development school has great programming both on-line and in-person both in Indianapolis and at other sites across the country. Take a look at their course offerings here!
Online Learning Options from Texas A&M Announced
If travelling for professional development isn’t in the cards (or the budget), the Center for Nonprofits at Texas A&M University has some great offerings! I recently enrolled in one of their certificate programs and really enjoyed the online format and the online discussions that were developed. It was time and money well spent and I would highly recommend this program, especially for early or mid-career professionals. The next session begins in early February and you can learn more here!
Other Ways to Connect
Our coaching practice has openings and it has been a blast working with nonprofit leaders all across the country! If you are interested in working with me to get your nonprofit organization on a track to achieve the big missions you have, please reach out to me at pinnaclestrategiesltd@gmail.com.
Here are some other ways you can keep in contact with Pinnacle Strategies!
Check us out on our LinkedIn Page
Check us out on the Celebrating Leadership Facebook Page.
Want to help support this newsletter?
I hope you have found value in this newsletter. If you have found it valuable and want to help, the best thing you can do is “hit the heart”! By liking this post, you help other people interact with it. Also, sharing and commenting is very helpful as well. Thank you.