Change Makers: Recent Episodes

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Reflections and recommendations for nonprofits based on the new-norm of uncertainty.
Regarding the economy and philanthropy, most of us predicted a considerable decline of the GDP and giving. But contrary to those expectations, 2020 brought a strange, end-of-year outcome: according to Giving USA, charitable giving reached a record $471.44 billion in 2020.What happened? Major gifts saved the day. Some fundraisers would say 2020 was a record year. For example, Mackenzie Scott, the writer, philanthropist, and owner of Amazon shares demonstrated a game-changing strategy worth noting. Trust-based giving. Her philanthropy is often under the radar, sometimes anonymously, and remarkably rapid. Hundreds of organizations received grants of $1 million to $10 million with little to no strings attached. As my guest Rick Happy, Principal & Managing Director at CCS Fundraising says, “I have to believe you’re going to start seeing shifts in how the wealthy, at the highest wealth, are giving their money away. Maybe fewer strings, less constrained, less oversight, faster decisions, more impactful decisions – we could be on a new course here.”That said, the trend of giving for the everyday American is on the decline. In 2005, families that earned $1M+ accounted for 12% of charitable deductions. In 2018 families who earned $1M+ accounted for 33% of charitable deductions. Last year 20 million fewer households gave than the year before. This is a big problem. Income inequality is a huge issue in this country and in philanthropy. Every year we are seeing fewer and fewer donors. So when we hear positive headlines about philanthropy and the increase in giving, it’s important to go deeper into the numbers. Although we see an increase in giving year over year, the number of donors has been decreasing over time. As the fabric of a civil and democratic society, this is a serious challenge for the nonprofit sector, especially regarding the survival of robust programs. We need to do a better job engaging people at all levels of giving.

While some organizations benefited from the outpour of support during the year of crisis, others were forced to lay-off staff, shutter doors, or merge to survive. Two sectors saw decline according to CCS’s Philanthropic Landscape Annual Report 2021: healthcare (3% decrease) and the performing arts (4% decrease). Performing arts organizations really struggled, and as long as we are virtual, this is going to be a challenge.

One thing we know for sure: wealth is not an indicator of generosity. Grassroots fundraising is having a new day especially online. In fact, social media was the area that grew the most in giving in 2021; online giving accounted for 13% of overall giving—up from 10% in 2019 and continuing to increase. I’m eager to encourage everyone to engage with causes they care about to buoy our community at large.

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On this episode of Rules of the Game, we’ll take a look at the ways nonprofits can work with newly elected officials to advance missions and policy agendas. Now that all votes have been cast, we have to begin looking forward to what’s ahead and what we want our local, state, and federal policymakers to consider over the comings months and years.

Show Notes

How 501(c)(3) public charities can build relationships with newly elected officials and their staff to amplify the organization’s mission and advance community’s policy priorities

• Congratulate or acknowledge those who won their elections
• Take care not to take credit for victory or “flipping the state”
• Can discuss how c3 registered “x” number of voters
• Can discuss how c3 increased voter turnout
• Can share why it’s good/bad X was elected
• Can share issues your organization hopes to work on with new official
• Remind officials what they promised during campaign
• Identify likely allies

During a site visit or meet-n-greet with new official a 501(c)(3) public charity may do the following:

• Inform official of organization’s mission
• Inform official of community’s policy priorities
• Share statistics on number of community served by organization
• Shine light on issues of importance
• Make budgetary asks or legislative requests (lobbying–IRS purposes)

501(c)(3) public charities can lobby a limited amount.

Lobbying is defined as activities designed to influence legislation, for IRS purposes.

501(c)(4) social welfare groups can lobby an unlimited amount.

Private foundations cannot lobby without incurring a steep excise tax, but they can engage in the following non-lobbying activities:

• Congratulate newly elected officials
• Hold elected officials accountable
• Schedule meet-n-greets
• Share funding interest
• Share foundation’s mission
• Build relationships
• Influence executive orders, rules, regulations (not IRS lobbying)
• Join us for future episodes of funding advocacy AND direct advocacy for private foundations!

Advocating on Executive Orders

• Don’t involve legislative action, therefore NOT IRS lobbying
• Safe for 501(c)(3) public charities and private foundation alike
• Ex. Gov. Newsom’s moratorium on death penalty
• Ex. Pres. Trump’s ban on gender & racial diversity training that conflicts with administration’s view of country’s founding

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The tax code permits 501(c)(3) public charities to lobby for policy reform (and defend against bad legislation), but how will your organization go about identifying its policy priorities and advancing them before policymakers? This episode walks through several steps your nonprofit can take to develop its policy agenda. 

Step 1: Talk to Your Community 

• • Obtaining feedback from your members and community is a critical first step in developing a policy agenda.
  • Utilize different approaches to assess the needs of your constituents and the communities your organization represents. For example, you might go door-to-door, hold community meetings, or survey your members and clients via email or text.
  • Consistency is key. If you haven’t done so already, begin these conversations now. Don’t wait until legislation is being voted on to ask for community opinions. Instead, assess community needs on an ongoing basis.

Step 2: Engage Partners 

• While every nonprofit can be effective on its own, it is much easier to amplify the voices and needs of your community if you partner with other organizations.

Discussing your policy agenda with other nonprofits can also help when analyzing potential unintended.

• consequences to the policy changes you propose. That is why it is important to reach out to peer organizations (working in the same policy space as your own organization) and to other organizations whose work could be impacted by your policy goals.

Step 3: Educate Legislators and other Policymakers 

• • Policymakers are not always experts on the issues that your organization cares about.
  • Nonprofit organizations that work closely with their constituents and partners are often experts in their fields, and they can educate legislators and other leaders about the needs being faced by communities and the policy changes that could best address those needs.
  • Also educate policymakers about how your policy proposal will be financed. By addressing budgetary issues up front, you can present policymakers with reform recommendations that they can easily understand and sell to fellow decisionmakers.
  • Most importantly, don’t be intimidated. Elected officials represent you, and they value the input of their constituents.
• Step 4: Engage in Outreach to Incoming Administrations
  • Use the interim period before newly elected officials take office to inform them of your community’s needs and influence their policy priorities.
  • Nonprofits can also make recommendations regarding cabinet appointees and judicial nominees, whose decisions will ultimately impact the lives of nonprofit clients and constituents.
  • Individuals who are nominated or appointed to key executive branch positions will ultimately be the ones charged with implementing the law. Holding conversations with these incoming leaders and educating them about your organization’s goals is a critical step in the policy agenda-setting process.

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This time, we’re going to look at how the nonprofit community can advocate for their mission and their own community no matter the process in your home state, and regardless of where your state is in the redistricting process. We also wanted to lift up that historically, how we encourage voting or limit voting in America is also through the lens of discrimination.

Topics Discussed:

• How the census, which is required to proportionally represent an entire state’s population, encountered a growing problem that politicians couldn’t fix for decades.
• How the Supreme Court in conjunction with citizen action in the 1960s addressed this issue, which resulted in the “One Person One Vote” doctrine.
• How redistricting election maps works and how it differs by state.
• Regardless of your state’s system to draw maps, your nonprofit can play a vital role in protecting your community’s right to vote and to participate in policy-making.
• Current day challenges in redistricting include high population densities, whether to count undocumented residents or only US citizens and questions on equity and race.
• How some nonprofits are engaging in the redistricting process and how your organization can get involved as well.
• What do gerrymandering and “packing” mean?
• What are “communities of interest” and what is “contiguity”?
• The importance of knowing the computer model your state uses to create maps

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In this episode of the pod, we’re going to walk you through the types of information you can get from a 990. You’ll hear how that information is helpful to a variety of individuals including a new Executive Director, board members, the press, staff, job applicants, donors, and more.
Topics:

• Why nonprofits are required to publicly disclose certain legal and financial information.
• The different kinds of Form 990s include:
  • Form 990
  • Form 990 EZ
  • Form 990-N
  • Form 990-PF
• When are Form 990s due?
• What are the penalties and fines for not filing?
• What can you find in a 990?
  • Identity, Tax Status, and Tax Year
  • How Much Income Did the Filer Receive and From What Sources?
  • How Did the Filer’s Total Expenses Break Down?
  • What Can You Tell from Net Assets?
  • Number of employees and board members, organization’s website, and EIN
  • What Kinds of Programs Does the Filer Run and How Much Does It Spend on Them?
  • Good Governance – Conflict of Interest, Whistleblower, Record Retention and Compensation Policies
  • Who Are the Filer’s Board Members, Officers, Key Employees, and How Much Does Its Top Staff Get Paid?
  • Did the Filer Initiate Some New Activity, Change Its Processes for Governing or Engage in Any Excess Benefit Transactions?
  • Did the Filer Engage in Any Self-Dealing Transactions During the Year?
  • Does the Filer Lobby?
  • When nonprofits must provide copies of financial documents to the public
• In-person requests
• Requests in writing
• Charges for copying and mail must be arranged in advance
• Fines for noncompliance
• Filers who share their 990s on their website are not obligated to produce copies upon request

As a reminder, this episode is just about the tax filing to the federal government (the 990) at the end of your fiscal year. Each state may also require a nonprofit public charity to file other types of forms, perhaps a copy of the 990, or some other tax filing. So, make sure if you’re a staff person that you work with your bookkeeper to understand all the end of the year filings you need to provide.