Donor-Advised Contributions Increase Dramatically

Nothing motivates major donors faster that potential tax law changes. According to the National Philanthropic Trust, there has been a 72 percent hike in donor-advised contributions. Favorable market conditions and concern over changes to tax laws may be responsible for this dramatic shift.

Donor-advised funds are most likely to be held by high-net worth and ultra-high-net worth individuals. Fears of giving caps influenced major donors in 2016. What will happen in 2017? What type of tax policies will the new administration devise? Questions with answers waiting to be revealed.

It should be noted that the surge in donor-advised contributions did not translate to increased contributions from those funds to nonprofit organizations in 2016. Nonprofits actually saw a decrease in gifts from donor-advised funds. Organizations should find solace in the fact the money is there but the check has not been mailed. As tax-policies become law, 2017 will be an experimental year for giving practices.

Changing Business Climate Favors Philanthropy

(A new trend in pre-IPO charity could be a game changer)

This year, Key Elements Group LLC looked at a new style of corporate culture sweeping the business world that may change how we define for- and non-profit organizations.

Kickstarter – the popular crowdfunding website that has catapulted to world renown over the past five years – announced in September that it was registering as a “Public Benefit Corporation,” a unique and relatively new category of business charter that requires companies to allocate large percentages of their profits to support social causes and to adhere to pro-social standards of business, including rigorous environmental standards.

The company’s CEOs follow the footsteps of institutions including Patagonia and Rasmussen Colleges, which trailblazed the field of Public Benefit Corporations. B-Lab, an independent third-party organization based outside of Philadelphia, PA, has helped set standards for these next-gen businesses dedicated to the pursuit of the social good.

As research emerges showing the philanthropic spirit of millennials and their desire to contribute their skills and work time to the public good, it has become increasingly evident that philanthropy in the workplace is taking on greater importance.

A recent development further confirms this trend. Venture capital companies – long reluctant to embrace philanthropy in the nascent stages of business development – are now directing funds pre-Initial Public Offering (IPO) to philanthropic and nonprofit initiatives. In what may be a first for businesses of its kind, venture-capital firm Fyrfly announced that it would start a foundation.

On its website, the company acknowledges the unique landscape facing business leaders going into 2016, as well as the pro-social spirit guiding millennial employees:

Corporate philanthropy is not an outlandish concept anymore. The Millennial generation has brought about a shift in economic values. They buy from brands they respect; they want to work for companies that put people over profit; they think deeply about the ethical ramifications of their lifestyle choices. Millennials are reshaping the purpose and responsibilities of corporations.

This is bold language for a budding firm, yet – in this day and age – it may give the company a competitive advantage. Millennial talent will go toward institutions that reflect and foster their values and passions. Furthermore, costumers increasingly care about the impact their spending has on the world. If businesses position themselves as social good leaders from the get-go, consumers will place greater trust in their brand identity. By diving headfirst into philanthropy pre-IPO, soon-to-be successful businesses may very well set the new standard for how companies are organized.

And, if Fyrfly’s move becomes the new normal, the potential effects on philanthropy are gargantuan. The foundation commitment will only pay off if the venture firm succeeds, but the windfall could herald unseen amounts of money going toward nonprofit groups. In the first three-quarters of 2015, venture capital amounted to $47.2 billion. In a business climate in which vast quantities of these funds are allocated for the social good, just a small portion of these monies would make a profound impact on the resource pool available for philanthropic organizations.

These are exciting times for both nonprofits and private companies in which it is never too early to give back. Now, it’s also never too early to start forging relationships that will lead to mutual success in the long-run.

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