Could Charity Marketing Programs Actually Hurt Donations?

We’ve all seen the Red Campaign to raise awareness and dollars for the fight against AIDS in Africa by giving a small portion of the profits of from sales of certain products (coffee, yogurt, t-shirts) to charity.  (An example is below).  But have you ever wondered if all that buying of cause-related products hurts donations to charities? The answer is yes, according to a study from the University of Michigan’s Ross School of Business.

“If two consumers have equal preference for a product, which is offered at the same price to both, but one of them buys this product as a cause-marketing product, her charitable giving will be lower than the other’s,” Ms. Krishna writes.

It was a reminder to me to see my purchase of Newmans’ Own products (the profits of which are donated to charity) as simply another purchase, rather than as a charitable gift.  It’s also prompting me to ask myself what are the unintended consequences of other innovative fundraising initiatives?

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Why Tuesday’s Supreme Court Ruling Matters to You

The Supreme Court yesterday handed down a decision (ACSTO v. Winn) that experts consider a win for proponents of parental choice in education. But the case has other significant ramifications for charitable giving, as explained by National Christian Foundation’s President, David Wills:

Tuesday’s ruling on parental choice in education is undoubtedly a significant victory for several states, including my home state of Georgia. However, there is another angle at the heart of this case that is quite important to us all: the nature of dollars deducted as charitable donations. Are charitable gifts government money or private money? The answer over the last several years coming out of DC has clearly been the former. In fact, you may have heard me mention that the the term ‘government subsidy’ is often used by our elected officials and their key staffers – both Republican and Democrat – when describing any funds that generate a charitable income tax deduction.

Whose Dollars Are Your Dollars?

The majority opinion makes the point that there is a distinction between a government appropriation and a personal expenditure that results in a tax benefit. The former is public money. That is to say, when the government collects tax revenue and then determines where those funds are to be spent, that is money over which the government does and should have control.

On the other hand, when a taxpayer makes a charitable gift and receives a deduction for doing so, the reality of the deduction does not change the nature of the funds.  The funds retain their status as private, non-governmental dollars.  The individuals who have earned and given those funds retains the private right to determine the use of those funds. Simply, a deduction or credit does not cause such funds to become the property of the federal government.

At first blush, one might think, ‘Of course, those are private funds.’ Don’t think so too quickly…and read Justice Kagan’s dissenting opinion.  Though I disagree with it, it is well reasoned. We are to be thankful that Justice Kennedy sided with the conservatives on the court and a 5-4 decision was rendered.  He essentially said that there was no standing for bringing the suit because the taxpayer (Winn) was not harmed because the funds were not governments funds.

Kennedy wrote: “A dissenter whose tax dollars are ‘extracted and spent’ knows that he has in some small measure been made to contribute to an establishment [of religion] in violation of conscience…”  On the other hand, with a tax credit the funds were never collected in the first place. “When the government declines to impose a tax,” Kennedy wrote, “there is no such connection between dissenting taxpayer and alleged establishment.”

Inside The Progressive Mind

Kagan countered by calling the distinction between tax appropriations and credits “arbitrary.”  She wrote, “Either way, the government has financed the religious activity. And so either way, taxpayers should be able to
 challenge the subsidy.”

Here is an excerpt from the NYT regarding Kagan’s dissent:

In her dissent in the case, Arizona Christian School Tuition Organization v. Winn, No. 09-987, Justice Kagan said the majority’s position was an elevation of form over substance. “Taxpayers experience the same injury for standing purposes,” she wrote, “whether government subsidization of religion takes the form of a cash grant or a tax measure.”

She offered examples. “Suppose a state desires to reward Jews — by, say, $500 per year — for their religious devotion,” she wrote. Would it matter to
 taxpayers offended by the practice whether the reward came in the form of a government stipend or a tax credit?

“Or assume,” she wrote, “a state wishes to subsidize the ownership of crucifixes” in one of three ways. It could purchase them in bulk and distribute them; it could reimburse buyers with a check; or it could pay with a tax credit.

“Now, really — do taxpayers have less reason to complain if the state selects the last of these three options?” Justice Kagan asked. Justice Kagan said the majority’s opinion was particularly surprising because the court had never thought the point even worth arguing over. “To the contrary: We have faced the identical situation five times — including in a prior incarnation of this very case! — and we have five times resolved the suit without questioning the plaintiffs’ standing,” she wrote.

Note where she uses the phrase: ‘government subsidization of religion’. When this belief becomes widespread, the charitable income tax deduction (or in this case a tax credit) for contributions to any religious organizations will eventually end.

A WSJ op-ed with a different slant began, “The Supreme Court’s big school choice decision yesterday is notable mainly for its insight into the progressive mind. To wit, no fewer than four Justices seem to believe that all wealth belongs to the government, and then government allows citizens to keep some of it by declining to tax it.”

Hanging in the Balance

This decision is a good news case for charitable giving, but let us not be lulled into thinking we have won the war.  We have only won a battle and are only one vote away from sweeping changes regarding the taxpayer and religious activity of many kinds.

One thing that is needed now are well reasoned law review articles that substantiate the ruling of the majority in this case and help under gird this ruling for future courts. A great deal is hanging in the balance.

David Wills serves as president of the National Christian Foundation in Atlanta, Georgia. He lectures throughout the country on issues involving foundations and nonprofit organizations, the transition of wealth, responsibility from one generation to the next, as well as tax and spiritual issues in charitable giving. Learn more about the National Christian Foundation and our other affiliates at www.servantchristian.com.

Why We Don’t Give More

A thankless person cannot be a generous giver.  Pastors and nonprofit leaders have been wringing their hands that Evangelical Christians typically give only 2.5% of their income.  Why? In part, because we do not believe that God loves us deeply, provides for our every need, and has given us an amazing gift of freedom from sin and a right relationship with Him.

Kids are honest; they have not learned the adult behavior of politely disguising unpleasant emotions.  My three-year-old recently received a dollar bill in the mail from Grandma.  He almost immediately cast it aside and only begrudgingly called Grandma to say thanks.  He literally didn’t know the value of $1 because we hadn’t taught him that those dollars have buying power.  (We’re now working on that).

Contrast that reaction with the scene when I brought home a box of chocolate for his valentine’s present.  He shook with joy and couldn’t wait to offer one to me and one to his dad because he was so excited about his gift.

I have to ask myself: what does my giving—of time, talent, and treasure—say about how thankful I am to God?  You?

Women Give More than Men: What are you doing about it?

Does your nonprofit have a distinct strategy for reaching female donors? Maybe it should. A study of giving by household shows that across income levels women are more likely to give and give more than men. The study by the Center on Philanthropy at Indiana University looked at giving by men and women across income levels and marriage status—never married, divorced, and widowed.

In all groups other than widow/widower, women were more likely to give than men. The group that gave the least to charity: men who have never been married. Widowed men were most likely to give (71% made some charitable contribution v. widowed females at 67%).

What does this mean for your nonprofit? It might well be worth finding ways to specifically reach out to women. Personally, I’d suggest it’s not enough to put a flower on your next mailer. Rather, figure out what is important to your female constituents and put those messages in your donor communications. Are you doing this already? What’s working and not working?

The Last Revival

“One more revival, only one more is needed: the revival of Christian stewardship; the consecration of the money power of the Church unto God; and when that revival comes, the Kingdom of God will come in a day.  You can no more prevent it than you can hold back the tides of the ocean.”  – Horace Bushnell

What would happen if you, me, and your neighbor started believing (and living like we believed) that God is good and will provide for our needs.  As an act of thanksgiving and a sign of obedience, we are called to give as part of a whole-life transformation. Imagine, for a moment, a world where we lived in that truth.

I see the dissolving of abject poverty around the world—living on less than $1.25 per day.  The folks at Compassion International have an audacious goal to wipe out such poverty in our lifetimes (check out Live58.org for more).

I see the Good News of Jesus reaching all corners of the world.

I see hope and resources being delivered to our inner cities.

I see a generation of givers transformed more and more into the image of Christ. That’s a beautiful vision.

Do you actually believe such a revival is possible? What does it look like?

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Generosity is: Inconvenient

Would you walk into the hospital room of a total stranger and ask them if you could help with fundraising for their medical bills?  That’s exactly what a friend of mine (we’ll call him Jim) did Monday afternoon.

The Kansas City Star ran an article last Friday about a girl paralyzed from a recent skiing accident.  On the same day her dad lost his job.  Jim promptly called me and said, “What I’m about to do is probably a really bad idea.  My wife will not want me to get involved, but I have to help this family.” The article mentioned the family was opening a bank account to raise money for the medical bills.  Jim knew they’d raise more money if people could donate with tax-deductible dollars.  So Jim started making calls.

The calls didn’t get him anywhere so on Monday afternoon, he stopped by the hospital to introduce himself to the family.  That’s it–a total stranger walking into a hospital room to offer help.  Talk about guts and inconvenience.  I’m sure Jim had “more important things to do” with four of his own kids at home and a thriving law practice.

Why would someone do such a thing, even knowing that meddling is a bad idea? Short answer, the Holy Spirit.  We all hear those nudgings: “stop and help those people in the snow”, “go talk to that man on the corner with change in his coffee mug.”  It’s easy to dismiss such thoughts, especially when we’re busy. The excuses are easy: “I have to pick up the kids,” “he looks scary”. Giving of our time is perhaps harder than giving money. We resent being inconvenienced.  But what would happen in our community–in our own hearts–if we headed these “bad ideas” more often?

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Challenges to tax exemption for churches

A spat in our own Mission, Kansas made the Huffington Post.  It’s not just the local interest that prompted me to write about it here.  Rather, I bring it up because it highlights a disturbing trend: people and governments calling into question the sanctity of tax exemptions for religious and nonprofit groups.

The argument between the City of Mission and churches in the area boils down to this question: “When a community needs to rebuild crumbling roads, should houses of worship pay fees for the number of times their congregants drive on them?”  I don’t want to weigh in on the debate here, but you can read the whole article if you want to know more.

To understand what’s going on here, remember that a church has typically enjoyed two favored tax benefits: (1) donations are deductible for those who give them and (2) the organization’s income is not taxed.  Both are under attack from various sources.  We have all heard that President Obama proposed limiting the charitable deduction for high-income families.  (Note also, the shift from talking about “tax exemption” to calling it a subsidy.)  And now cities like Mission and Houston are levying “fees” on churches.

What can a ministry do?  It seems we have a few appropriate responses: (1) speak out publicly; (2) vote; (3) become increasingly savvy with fundraising (we’ve written on this topic before – see Bill’s post from 2010 about giving trends).  Also, consider getting plugged into an initiative like Mission Increase.  It offers strategic training around fundraising as a transformational aspect of a ministry, rather than a means to an end.

Servant is hosting a training soon.  Here are the event details:

The Journey to Transformation
Thursday, February 3, 2011
9:00 AM to 4:00 PM

 

Sylvester Powell, Jr. Community Center
6200 Martway, Mission, Kansas

Register online

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