Congress Gives Partial Extension to IRA-to-Charity Rollover

On December 16, the U.S. Senate voted to extend several charity tax breaks through only the end of 2014, though many in the nonprofit sector want a permanent implementation of the policies.

Many fundraising professionals support the IRA rollover tax break in particular, which they want implemented permanently. Before the vote, the tax breaks only applied to 2013 tax filings, but are now slated to apply to donations made by the end of the 2014 calendar year.

Enacted in 2006, the IRA tax-to-charity rollover allows 70-1/2 or older U.S. citizens to donate up to $100,000 from their Individual Retirement Accounts (IRAs) to public charity without being taxed. According to some sources, older philanthropists were waiting to see the result of the vote before making giving decisions in the final weeks of 2014.

The IRA-to-charity rollover encourages charitable giving among older prospective donors – especially those who do not itemize their donations. The tax break allows individuals to give large sums from their IRAs to charity without that allotment applying to their adjusted gross income. Additionally, the donations are applicable to required minimum deduction. This means that on joint-tax returns, a spouse can used a Qualified Charitable Distribution (QCD) to exclude up $100,000 per his/her partner’s charitable giving through the IRA rollover.

In the past, Congress has voted on the retroactive applicability of the IRA rollover tax. If Congress picks up the debate again and passes similar legislation, the tax break could theoretically apply to the 2015 calendar year.

Other tax breaks given partial extension through the end of 2014 include conservation donation incentives that help modest-income landowners contribute to land conservation efforts and food inventory gift incentives that encourage farmers to donate excess food stock to food banks.

As Donor Behavior Shifts Online, Salvation Army Struggles to Raise Funds

The last few years have seen tremendous growth in philanthropic fundraising, as the economy slowly but surely emerges from the recession. Recent figures indicate that nonprofits raised $335.17 billion in 2013, a 4.4 percent increase from the previous year. This amounted to a 22 percent increase in charitable giving since 2009 (the year many analysts consider the official end of the recession).

With falling oil prices and 2014’s widely publicized online giving campaigns, this year should follow the growth trend. On #GivingTuesday alone, donors contributed a sizable $45.7 million, heralding the start of a new, lucrative tradition, and perhaps showing early signs of improving consumer confidence as energy costs begin stabilizing at low levels.

Not all nonprofits are feeling the love, however.

The Salvation Army’s red kettle fundraisers – stationed outside of retail outlets around the country – are a cultural staple of the giving season. The jingling bells and friendly volunteers remind gift-hunting consumers that there is more to the holidays than materialism. But this fundraising strategy is proving less effective than ever before, as Salvation Army chapters across the United States struggle to meet their fundraising goals.

Programs from Upstate New York to Kansas, Missouri to Wisconsin, and Iowa to North Dakota are falling far behind their goals. Some Salvation Army efforts have raised as little as 50 percent of their targets as they enter the final days of the holiday season.

So why are the red kettles empty? Specialists point to the shift in donor behavior toward internet-based donations. The online giving trend emerged in early 2012, when analysts noted a 14 percent leap in online fundraising from the previous year.

Web-based fundraising has a number of benefits. Development professionals and data analysts can comb social media and advocacy forums to find particularly vocal or committed prospective donors. Web-based monthly donations are also an easy sell, offering streamlined and paper-free subscription services that simplify the giving process.

Indeed, scores of the most impactful fundraising initiatives these days are only actionable on the internet, as evidenced by the wild success of the ALS bucket challenge. Friends and family members challenged each other using social media, exercising an effective, digital brand of peer pressure to solicit over $100 million in donations.

Another huge component to the digital transformation of U.S. giving behavior? Millennials.

Young adults are more likely to consider themselves philanthropists, with 26 percent of them self-designating as such as opposed to only 18 percent of baby boomers. The growing generosity of millennials goes hand-in-hand with recent fundraising developments on social media, where younger demographics are disproportionately represented compared to other age groups.

Salvation Army volunteers may be getting the snub because donor behavior is shifting solidly in the direction of online charity, as younger generations of donors become increasingly habituated to digital fundraising and other prospective donors have already been tapped by social media campaigns and other online nonprofit initiatives.

Consumer spending also appears to play an important role in Salvation Army’s troubles. Retailers had a slow start this year, with lackluster figures for Black Friday and a growing number of consumers shopping online. With fewer people walking in and out of stores, there are fewer prospective donors. The biggest shopping day of the year, however, is just around the corner, and perhaps a late surge in shopper confidence will help fill the empty red kettles.

But the needy are already feeling the effects of Salvation Army’s poor performance. In Elgin, Illinois, families lined up outside the area-Salvation Army headquarters to receive food stuffs for the holidays. Many were turned away empty-handed. One of the staff commented that it “was sad to see the need but even sadder to watch all the food dwindle away as the line of those seeking help grew shorter, then turning those in need away due to the lack of our food donations.”

No nonprofit wants its operations to shrink, especially one providing basic needs. If traditional means of fundraising are no longer sufficient to meet the same demand for its services, Salvation Army should look to expand its methods and strategies for 2015, exploring the possibilities of online fundraising and integrating with new charitable institutions such as #GivingTuesday.

#GivingTuesday’s Big Impact on Philanthropy

The optimistic projections were correct—#GivingTuesday was a roaring success, as non-profits across the globe successfully raised millions of dollars.

The Lilly Family School of Philanthropy at Indiana University plans to release a comprehensive report in the coming months. The Case Foundation has given an initial fundraising estimate at $45.7 million, indicating a 63 percent increase in overall revenue from 2013.

Jean Case—CEO of the Case Foundation—commented on the numbers: “Just as Cyber Monday and Black Friday are key indicators of consumer sentiment and economic health, this data on #GivingTuesday can serve as an indicator of the health of our giving economy.”

Where #GivingTuesday has grown, the consumer-oriented days surrounding it have suffered. On Black Friday, sales were down 11.3 percent from last year, and Cyber Monday sales were up a paltry 8 percent.

Non-profits who made out on #GivingTuesday can—in part—credit the ALS bucket challenge for their success. For the first time, a social media campaign attracted a broad array of demographics to get behind a unifying message, thereby raising millions of dollars. Having happened within the last year, this likely prepared social media users for #GivingTuesday. The ALS challenge habitualized the online community to charitable giving. Inculcating this habit has evidently paid off, creating a receptive class of online donors.

This year, #GivingTuesday also attracted more participating organizations than ever before. Over 20,000 non-profit organizations partnered up, a significant increase from the original 2,500 that participated in 2012.

That kind of momentum is big. As more organizations participate, the more institutionalized and recognized #GivingTuesday will become. Indeed, the social media-oriented event may well become the single most lucrative day for non-profits annually.

Philanthropists and organizations participated in numerous ways. In what may become a reoccurring fundraising strategy, Seton Hall University synthesized a traditional fundraising model with #GivingTuesday-style online crowd-sourcing. An anonymous donor pledged $100,000 if small donors matched the amount. The school exceeded the donor’s goal, raising $415,000 by the end of the #GivingTuesday challenge.

#GivingTuesday is also attracting prominent spokespersons. Ed Norton is no stranger to fundraising. The famous actor began a for-profit fundraising platform called CrowdRise in 2009. He integrated #GivingTuesday into his website, and offered his thoughts on what the day means and how his company chose to participate: “People like to see and feel that they’ve been a part of something big, and so we wanted to create a campaign that shows the collective impact of giving on Giving Tuesday.”

The campaign he refers to is the CrowdRise Giving Tower, an app that allows users to “see the world’s charitable efforts grow in the form of a tower made in augmented and virtual reality.” The app works by creating a visual representation of global charitable fundraising, stacking bricks higher as more money is raised in an interactive digital art piece. As groups develop new virtual assets around #GivingTuesday, they place greater stock and investment in the day itself, endowing it with greater financial significance.

The international character of #GivingTuesday was in full view this year. Over 68 countries participated. From Argentina to Singapore, Spain to Israel, people across the world engaged online, donating to their favorite charities and spreading the message of giving. There were over 32.7 million Twitter impressions, and 698,600 hashtag mentions.

This grand scope heralds an even bigger, more successful year to come in 2015.

Seven Celebrity PR Disasters and Their Impacts on Fundraising

Celebrity donors or spokespersons can make a huge difference for non-profits, foundations, political campaigns, and higher education. High-profile figures bring attention to an organization’s activities, expanding the reach and scope of its message.

But this public attention—as valuable as it is for fundraisers—can also be a curse.

Organizations do not want to associate with controversy when it’s avoidable, especially if it is caused by one of their philanthropic luminaries who naturally attract so much media scrutiny.

Just recently, Bill Cosby stepped down from his position on the Temple University board of trustees. As thankful as the the university likely is for Cosby’s philanthropic support over the years, it takes no stretch of the imagination to understand why the actor—reeling from renewed sexual assault and rape allegations—would distance himself. There is no doubt that the board of trustees and administrators at Temple would prefer to keep their work as far removed from Cosby’s issues as possible.

There is no certain metric to gauge just how bad the fallout of a public relations disaster will be. The effects, however, can be very palpable.

Here is a list of seven celebrity PR imbroglios that have—in some way—adversely affected philanthropic work. Each case is different, but they all reinforce the fact that the behavior of high-profile spokespersons can hinder the efforts (or even tarnish the image) of the non-profit organizations they represent.

LANCE ARMSTRONG
In 2012, the world learned that Lance Armstrong used blood doping in order to gain a competitive edge in cycling. In an emotional plea presented on Oprah, Armstrong sought atonement for his actions and apologized for hiding the truth.

Up until these revelations, Armstrong symbolized will-power and munificence. After beating testicular cancer, he went on to compete in international cycling, winning numerous titles along the way. He also founded Livestrong, a hugely influential cancer-support non-profit known for its yellow solidarity bracelets that raised millions of dollars.

Following his admission of guilt, Armstrong lost numerous sponsorships and cut ties with Livestrong. Losing its highly recognizable public face resulted in concrete financial loses for the organization. In one year, the non-profit reported a 22 percent decline in revenues, falling from $44.8 million to $38.1 million.

Who says there’s no such thing as bad press? With the departure of the group’s founder, Livestrong lost its chief fundraising personality, and suffered for it financially.

TIGER WOODS
Sports writers and philanthropy analysts consider Tiger Woods one of the most philanthropic professional athletes ever. His Tiger Woods Foundation awarded $2.9 million in scholarships and education grants in 2010. His youth centers offer after-school educational programs, as well as sports training for kids.

Less salubrious aspects of his life, however, caught media attention in 2009, when celebrity gossip magazines began publishing information on Woods’ extramarital affairs. The claims and public scrutiny culminated in a domestic dispute in which Woods crashed his SUV into a fire hydrant after an altercation with his wife.

After publicly apologizing for his adulterous behavior, Woods went into a self-imposed exile from public golf tournaments—including his own charitable events. He skipped out on the Chevron World Challenge, one of two major charity tournaments that raises money for his foundation. Woods’ absence resulted in over $25,000 refunded to disgruntled attendees, as well as a 20 percent ticket discount for the following year’s event.

Tiger Woods’ celebrity is an essential component of his fundraising power. When potential donors or ticket-buyers were unable to enjoy his presence at an event billed with his name, they didn’t show up. And neither did their money.

PAULA DEEN
The empress of a vast media empire, Paula Deen made a name for herself through her southern charm and butter-heavy, down-home cooking. Fans from across the country became enamored with her cookbooks and television programs, making her one of the most influential celebrity chefs in the United States.

But during questioning under oath, however, not-so-savory stories from her past crept into the media spotlight.

In 2012, a former employee of a Savannah, Georgia restaurant co-owned by Paula Deen filed a discrimination lawsuit, alleging that she was the victim of sexual harassment and the target of racial slurs. When Paula Deen was questioned on the matter the following year, prosecutors asked her about her racial attitudes. She admitted to using racially charged language in the past, and that she also entertained the idea of hiring all black waiters for her brother’s wedding to recreate an antebellum south atmosphere.

The response was swift. The Food Network cancelled her show and Deen hid from the public eye. This posed huge issues for the rollout of her Bag Lady Foundation—a non-profit that helps at-risk women and combats hunger. At the time of Deen’s controversy, the group had raised nearly $100,000. Being fundamentally tied to Deen’s public image, however, the organization was pushed into a period of hibernation after its celebrity figurehead receded from the spotlight.

Deen let the buzz die down, and came back a year later, announcing large investments in her reborn cooking brand. The Bag Lady Foundation finally began its charitable activity, too. The star’s year in hiding, however, delayed the implementation of basic needs funding, and singularly prevented the foundation from pursuing its mission.

MARTHA STEWART
In 2003, Martha Stewart was indicted on securities fraud. Stewart sold off 4,000 shares of stock in ImClone Systems, Inc., shortly before the USDA declined to approve a new cancer drug designed by the company. The timing aroused authorities’ suspicion, leading to her trial and eventual conviction. Stewart would spend 5 months in a federal correction facility.

Stewart made her public comeback in 2005, and her company—Martha Stewart Living Omnimedia—once again became profitable the following year.

The fallout from her conviction dissipated, and Stewart returned to her former levels of prestige. Her philanthropic work is widely celebrated. In 2006, she put forth $5 million to open the Martha Stewart Center for Living at Mount Sinai Hospital in New York, aimed at innovating geriatric practices.

At the time of her legal troubles, however, Stewart’s money became toxic. A long-time donor to the Democratic party, Stewart had given Hillary Clinton $1,000 for her electoral campaign. Following the indictment, Clinton opted to donate Stewart’s donation, giving the money to charity instead of using it for her campaign.

While non-profits, foundations, and campaigns are always looking for funding to further their goals, sometimes the money they receive costs more in public relations than it’s worth in real terms.

DON IMUS
Don Imus—famous political shock jock known for his “insult humor”—went too far on his Imus in the Morning program in April, 2007, when he referred to the Rutgers women’s basketball team as a group of “nappy-headed hos.” The backlash was immediate. The following day, activists and public figures began calling for his cancellation. Sponsors pulled out from the show due to the racist comments. MSNBC disavowed itself of Imus’ simulcast. Before long, the show was dropped by CBS.

Every year, the lewd program would pursue a goal loftier than meting out satire, ridicule, and—in the aforementioned case—racist stereotypes. The show presented an annual telethon raising money for the Imus Ranch, a retreat that allowed cancer-stricken children the chance to live an authentic cowboy life, helping them cultivate self-esteem, live healthily, and commiserate with other kids suffering from similar ailments.

The annual telethon raised millions of dollars for the highly expensive operation via the listenership of Imus’ massively syndicated radio program. The abrupt cessation of the show’s broadcast starved the ranch of it’s bedrock source of annual revenue.

The ranch would survive until 2014, when Imus announced its closing due to personal health issues. His infamous racial slurs, however, caused a massive financial headache for his charitable program.

OSCAR PISTORIUS
In September, 2014, a South African court convicted Oscar Pistorius of culpable homicide (the South African equivalent to manslaughter) in the shooting death of his girlfriend, Reeva Steenkamp. A month later, the court sentenced him to 5 years in prison (though he’ll likely only serve a year).

The international sports phenomenon, nicknamed “bladerunner,” sky-rocketed to fame in 2012 as the first amputee athlete to compete in the Olympics. Born with fibular hemimelia (the absence of fibula), Pistorius had both of his legs amputated when he was 11 months old. This physical limitation did not stop him, however, from becoming one of the most widely-recognized sprinters in the world.

In an effort to use his global celebrity in a positive way, Pistorius announced in February 2013 that he was starting a foundation in conjunction with the University of Strathclyde in Glasgow to help develop affordable prosthetic legs for children in Africa. Two days after this announcement, Pistorius fatally shot Reeva Steenkamp in a locked bathroom at his home, claiming that he thought she was an intruder.

Unsurprisingly, his foundation never got off the ground, and the university he was working with lost a high-profile spokesperson for their humanitarian goals.

ROB FORD
The former mayor of Toronto is no stranger to controversy. In fact, you could view him as a case study in PR perseverance. He has weathered the fallout from all manner of public faux-pas, ranging from public intoxication to the use of racially charged language. Not to mention being filmed smoking crack cocaine while holding public office.

After being diagnosed with a rare form of cancer, Ford stepped down as mayor in September 2014, and handed his brother the reins of his reelection campaign. One particular lapse in judgment involving his charitable foundation, however, nearly ousted him from the mayoralty earlier.

In 2012, Ford sent out direct mail fundraising appeals to a number of lobbyists, requesting money for his non-profit program supporting Toronto-area high school football teams. This, of course, was a mayor directly soliciting political lobbyists for money.

City officials were not pleased, and initiated a vote that would have required the mayor to return thousands of dollars received from lobbyists. Rob Ford should have recused himself from the vote, but did not. Political opponents took him to court for breaking Ontario law requiring the disclosure of conflicts of interest, where the judge issued a stayed ruling kicking Ford out of office.

He appealed, and ended up winning the case, allowing him to not only keep his job but also the thousands of dollars he received from lobbyists.

The incident tied up foundation funding in legal limbo for over a year while opposing sides duked it out in court. Certain public positions require due diligence regarding particular matters—in this case asking lobbyists for money. By breaking this rule, Ford threw the receipt of valuable foundation funding into doubt.

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