Sunday, March 10, 2019

Fundraising: The New American Pastime

It's too bad that the tax laws changed right around the time that everyone became a fundraiser.

It was crazy enough when anyone could start their own 501 c 3. That at least required some knowledge, planning and goals.  But now, you too can become an Instant Fundraiser by creating a page on Kick-starter or GoFundMe, or some other platform from a fast growing list. Even my elderly relatives are raising money for a cause on Facebook.  Last week, I read that Instagram is getting a donate button.

Grrreat.

I started out this post intending to complain about how hard nonprofit fundraising already is without every single person old enough to get on social media as competition. But then I got a Timehop notification of an old tweet asking why couldn't we give bigger tax breaks for donations that reduce the tax burden?

So I thought maybe I'd write instead about a new charitable taxing system that factors in average citizens as fundraisers.

Right now, all I have are questions.  Does it make sense to stagger tax benefits around what cause a donation goes to? For example, would it make any sense for a donor to get a bigger tax break if he/she gave money to a cause the government has to pay for? So, if you donated to a food bank, you would get a bigger tax break than if you gave to the symphony. Not that I have anything against the symphony, but I don't see anyone complaining about how many tax dollars are being spent on the symphony. The idea here would be to utilize the American desire to support a cause as tax relief.

Or take it even further, and say that a donation to a "teach a man to fish" effort got a bigger tax break than a "give a man a fish" effort, because prevention has a better ROI than intervention and warrants a larger tax break.  Or maybe, only donations that go towards charities that directly relieve government social programming are even eligible for a tax break.

As many as 87% of Americans donate according to this Gallup poll. Nearly everyone does, according to this report.  Combine that with American's "profound yearning to change the world," according to this great TED talk, and we might be on to something.

Americans hate paying taxes. They hate the IRS and they hate the idea that someone is cheating on their taxes or paying less taxes than they are, or both.  But they don't hate all taxes. Obviously, the majority of Americans understand the need for taxes to pay for things we collectively need and benefit from.  Where we get into trouble, is having to pay taxes for things things like social services.

Charitable deductions were established form the beginning in part as a way to to relieve taxes and help nonprofits. But faith in the system has damaged the efficacy of that plan. It's time for a reboot. Although there is evidence that nonprofits do a better job of providing social services than the government does, it's also a fact that the general public is as distrustful of the nonprofit sector as it is of the government. It's no wonder we struggle with proving value, producing outcomes.

I'm not saying that nonprofits should replace government, just that nonprofits that develop expertise in social service delivery are more likely to be effective than government at actually solving problems. Just like in the private sector. And further incentives to support those nonprofits could be a really good thing. 

I know little to nothing about taxes, other than how to how to fill in boxes on Turbo Tax and pay it to file for me. But I know a lot about nonprofits and social services and fundraising.  Fragmentation of funding has been eroding the effectiveness of social services for years.  This trend where everyone's a fundraiser is only going to lead to more problems with the stability and sustainability of critical nonprofit services.

I know a lot of people who’d be even more incentivized to raise money on social media if they knew they were reducing taxes and solving problems. It’s time to evolve the system.

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