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Trends in Community Development Investment in Twelve New Mexico Counties

November 12, 2018

Accessing capital is fundamental for a thriving community; however, the lack of available information regarding trends in community development at the county level makes it difficult for communities to strengthen underfunded sectors. The Urban Institute, a nonprofit research organization, addresses the lack of information available about trends in community development by gathering and synthesizing vital information and statistics. It created the Community Development Financial Flows data tool ( to better understand the funding landscape. This tool assesses investment in counties with more than 50,000 residents from 10 federal programs and regulatory supports. The data shows that, while some counties are successful in accessing federal capital, many more struggle significantly.

The Urban Institute collected and analyzed data from nearly 1,000 counties across the U.S., including 12 New Mexico Counties – Bernalillo, Chavez, Curry, Doña Ana, Eddy, Lea, McKinley, Otero, Sandoval, San Juan, Santa Fe, and Valencia. Data indicators include:

  • Housing (includes U.S. Department of Housing and Urban Development [HUD] HOME awards, low-income housing tax credit allocations, HUD Choice Neighborhoods awards, and investment deployment by the Community Development Financial Institution [CDFI] Capital Magnet Fund awards)
  • Small Business (includes Community Reinvestment Act–reported bank small business lending)
  • Impact Finance (includes CDFI lending and New Markets Tax Credit Program investments)
  • Other Community Development (includes HUD Community Development Block Grant, HUD Section 108 lending, and U.S. Department of Education Promise Neighborhoods awards)
  • Combined ranking, which is the average of the other four indicators

Each indicator is separated into an “Overall” category and an “Among Similar Counties” category. Large counties have populations of more than 300,000 people; midsize counties have populations between 100,000 and 299,999 people; and small counties have populations between 50,000 and 99,999 people. New Mexico County populations are listed in the table below, and maps indicating county rankings follow. Rankings are based on 982 total counties surveyed, 219 of which were large counties, 373 of which were midsize counties, and 390 of which were small counties.


The above rankings indicate that New Mexico counties largely fall behind other counties around the country in accessing community development investment overall. With few exceptions, nearly every county in every category ranked in the bottom half of national standings. However, when compared with counties of comparable size, New Mexico counties fare much better across indicators, with all counties ranked between 1 and 400 and Santa Fe County performing particularly well across indicators (as well as Doña Ana, Sandoval, Bernalillo, and Lea across some indicators). Notably, Santa Fe County ranks 13th in the Combined Overall category, and 2nd in Combined Overall when compared among midsize counties; and 3rd in the Impact Finance Overall category and 2nd in Impact Finance when compared among midsize counties. Doña Ana County ranks 73rd in the Impact Finance Overall category and 26th in Impact Finance when compared among midsize counties. Lea County ranks 308th in the Housing Overall category, but 90th in Housing when compared among small counties. Sandoval and Bernalillo Counties rank 282nd and 200th in the Impact Finance Overall category, respectively, but 92nd and 62nd in Impact Finance among midsize and large counties, respectively.

What do these rankings mean for New Mexico? According to the Urban Institute, community development and associated rankings are actionable. Local reflection and targeted strategies can improve access to funding flows, with the Urban Institute citing the Community Development Financial Flows data tool as a catalyst for “sparking local dialogue and informing strategy design.”[1] In New Mexico, government, collective impact groups, nonprofits, and more are taking action to effectively increase community development investment across the state. This year, U.S. Representative Michelle Lujan Grisham (now Governor-elect) helped pass an amendment to increase funding for Community Development Financial Institutions (CDFIs) in New Mexico. “CDFIs drive economic development by providing financial products like loans, investments, and tax credits to underserved communities including poor, rural, and tribal areas.”[2] According to Rep. Lujan Grisham, the amendment “will enable New Mexican entrepreneurs to obtain capital to start and grow small businesses, help pueblos to build affordable housing, and provide access to economic development opportunities for rural communities throughout New Mexico.”[3] Public and private entities have come together through such projects as Innovate ABQand City Alive to support job creation, systems change, and fostering economic development and local talent. Several nonprofits, including our nonprofit education arm The Grants Collective, have begun emphasizing expanding fundraising capacity and forging connections and relationships to build up communities.

In a state where nearly 96% of all businesses are small businesses,[4] New Mexicans are committed to investing in themselves. By connecting with one another and finding homegrown solutions to New Mexico’s community development investment issues, New Mexico’s rankings will continue to grow.


Contact: Melissa Leonard, Resource Development Officer, 



For more information on the Urban Institute’s data tool, community development investment, and questions to guide discussion and reflection, please visit the Urban Institute’s website at

[1]The Urban Institute, “How Does Your County Fare in Accessing Federal Community Development Funding?”, 23 August 2018.

[2]Michelle Lujan Grisham,, 2018.

[3]Michelle Lujan Grisham,, 2018.

[4]U.S. Small Business Administration, “Small Business Profile – New Mexico,”, 2016.



Resist the Dollar Sign! How to Know If You Are Really Grant Writing Ready

October 26, 2018

Is it true that grants = free money? It is certainly true that all nonprofits need money to advance their mission, and those big dollar signs you see in the news tied to grant awards are so appealing. All you need to do is write a proposal, submit it, wait for the check to come in, and then your programming can take off! Right!?

Well… not really.

While grant funding can be incredibly useful to expand capacity or improve quality, it takes strategy and preparation to get the best out of your grant-pursuing experience. Organizations often overlook the hidden price of applying for grants, and it can end up costing them big time. Every dollar spent on a contractor or employee to search for grants, craft proposals, and gather information is another dollar that could go towards programming. Then there’s the amount of time it takes to hear back on funding, which may leave your program in limbo for months. Make sure you are well positioned and competitive to apply for grants before you even start the search for grant opportunities. If you are not, it is almost a guarantee that pursuing grant funding will drain organizational time and resources that could be put to better use while not yielding the boost that you are seeking.

Let’s talk about when grant funding is not a great fit.

These are “square peg” moments when you are trying to fit the square peg of grants into a circle shaped hole in your budget. The most common square peg moments are:

(1) Your organization and program lack other sources of income besides the proposal you are writing. If you cannot assure the funder that they are not the only source of income, most will shy away. Funders would like to know that if they disappeared tomorrow, your program would still be in existence. They also want to see a history of successfully managing other sources of funding.

(2) Your organization and program lack proof that it works. Most funders (and especially any government funders!) are not the world’s greatest risk takers with their money. They are considering investing in your organization and want to see some evidence that your organization’s service delivery works. Even if you are using a national model, they still want proof that you can carry out your services.

(3)  Applying for grants as short-term emergency funding. Between the writing process, proposal evaluation process, award announcements, and fiscal year restrictions, many grants can take 10-12 months from the moment you begin writing to when you actually see the money. On top of that, funders typically want to avoid being the stop gap in a budget that is in the red. While some funders may be quicker and some are set up for emergency funding, they are generally few and far between.

If any of the above conditions apply to your organization, reconsider using your valuable time and focus on other, quicker, resource development strategies such as individual donations or developing an earned income stream while building your programming.

How can you be grant ready?

Below are conditions you should strive for before pursuing grants:

(1) You have established the organizational basics: a sound mission, vision, and goals; committed board members, capable staff/volunteers; appropriate tax status; and a solid budget/financial plan.

(2) You have secured other sources of income and resources. When it comes to funding, appealing to your local community through fundraising campaigns and volunteer-drives can bring in resources much more quickly. A bonus to this approach— very few people in the community ask to see your budget, logic model, or five-year plan! If they feel connected to your cause, they will give to it. This income also acts as proof to funders that you have broad support, and the community values your programming, and people trust your organization, making it easier for a grantmaker to do the same.  Tip: when considering your resources always remember your in-kind “income”— that is, people’s time, things, and space that you don’t pay for have value and can be used as leverage in a proposal.

(3) You have data that your program works as intended. Just because you do not have the budget to hire a data analysis firm or you don’t have years to perform research doesn’t mean you can’t start getting some information right away. As soon as you start putting your programming into action, you can start collecting data. It can start with simply asking who is showing up and how satisfied they are with the program. As you gain more resources, you can become more sophisticated in your data gathering efforts and really measure your impact. To start, make sure you focus on relevant data that your organization has the capacity to collect in the most meaningful way possible.

(4) You have thought strategically about why you need funding. Once you have started gathering resources and data, even if it’s simply volunteers and client satisfaction surveys, you have a baseline. Now start asking your staff, board, and clients where they would like to be in one year. What is an acceptable satisfaction rate for clients? Is the program expected to improve the lives of clients, and if so, outline a tangible way to measure (e.g., 95% of clients experienced improvements in their lives, as measured through surveys)? Is there a desire to increase the number of clients served or to design more rigorous data collection methods? Whatever it is, figure out your stakeholder’s top priorities, aim for a reasonable one-year goal, and figure out what resources are needed to get there.

When it comes down to it, satisfying these conditions are proof to funders that your organization is run effectively and is making a difference.

To sum, before you jump head first into grant-seeking as your main strategy to build up a budget, stop and think strategically just like you would when developing a new program or organization. Don’t waste your time or your staff’s time, by going after grants when you aren’t ready yet. Instead, put those resources towards becoming grant-ready—which can have the positive side effect of making your organization stronger and more resilient through diversified funding. It will set you up for success for years to come and improve your organizations capacity and effectiveness overall.


Contact: Jeff Andersen, Resource Development Officer


Plant seeds that grow into trees: The value of grant writing even if you’re not sure if you’re competitive

September 20, 2018

Deciding which grant opportunities to pursue is a challenge; organizations with limited budgets and staff frequently try to reduce risk by pursuing the same grants and the same funding levels annually, often looking to small local foundations for funding. This approach can be a great way to start—it can help to develop strong relationships with funders over time, support consistent funding projections, and minimize the investment of time and resources in grant writing. However, it can also be valuable to stretch outside of your grant seeking comfort zone. Is your organization is looking to grow capacity, or add or change programs? Then it may be time to dream bigger and look to larger funding opportunities, even if you’re not completely sure you will be competitive. Generally, the process of shooting for bigger grants requires some trial runs before you hit on success, but in the meantime it can be a great way to help your organization get organized.

The thought of sinking precious resources into a new, more-daunting-than-normal proposal with an uncertain outcome can be scary, especially if you’re not sure if your organization can be competitive. First of all, be realistic and do not overshoot. It is important to employ a strategic growth plan when it comes to grant seeking—grants are almost always highly competitive and your organization inevitably has limited resources to respond to RFPs. You want to identify opportunities that are a small stretch for your organization, but still within reach. With every new award, you are diversifying and increasing your budget, growing your capacity, and demonstrating that you can be a good steward of grant funds. All this means that you can continually expand your reach and the award size requested.

Even if you are not funded, the process of putting together a more ambitious proposal, including a budget and all the attachments, can pay dividends. A larger, more process-intensive proposal forces planning and organization work to happen quickly because you have a deadline and a list of requirements. Those general thoughts of “we should update our financials and our org chart” become “we need to do those things now.” If you have partners that have been noncommittal for some time, the process can be an excuse to formalize those relationships and get roles and obligations in writing. Especially if your organization works with partners and you’re having a hard time getting them to commit to anything specific, working together on a large proposal can be galvanizing.

Even when the terms of the proposal seem a bitbeyond your organization’s means, the proposal preparation process can be a useful exercise to getting your ducks in a row and set you up for future proposals for which you know you will be competitive.

Let’s look at the benefits of progressively stretching your proposal-preparation wings.


  • Solidify your partners and define your relationships
  • Gives you a hard timeline to convene your partners around the table
  • Get specific commitments and timeframes for completion in writing


  • Get your organization and program documents in order and up-to-date (for more on preparing for a proposal, see In Grant Writing, Getting Ready is (More Than) Half the Struggle)
  • Think through the project or program details and put together a comprehensive budget, organizational chart, and staffing plan
  • Create useful visuals like a logic model, services flowchart, and other infographics. These are handy both in proposals and for general marketing when you need to explain your program and/or organization.

Thinking big and telling your story

  • Practice telling your organization’s story and describing your program
  • Allows you to dream big—what would you do if you had more funding?
  • Writing something longer and more ambitious gives you material to draw from for smaller proposals, making other grants less work down the road.

A bonus of going through this process—the more you write grants, the more practice you get thinking on a funder’s terms. Every funder speaks its own language, and your success rate will improve if you practice changing your writing voice to mirror it (while not compromising or changing your programming in order to chase funding). Look at the available materials that are written by the funder, such as the website or the RFP, and use their jargon and phrasing, focus on their priorities, and look at what types of projects they have funded in the past and make sure your organization seems well positioned relative to these funded projects.

And a final thought—you might be more competitive than you think! At The Grant Plant, we submit at least a few “longshot” proposals every year as part of our strategy to help our clients grow their capacity and community impact. Many of these have been awarded and launch productive new relationships with funders. Remember, you have a 0% chance of an award if you don’t apply; submitting something ensures that you’re at least in the running. You never truly know who is going to review your proposal; your organization and the work you do may just be kind project they are looking for!


Contact: Jenny Jackson, Senior Resource Development Officer,

How Can Hollywood Help You Write a Winning Proposal?

June 6, 2018

Nearly everyone has a favorite movie with lines and moments they can recall years later. What makes movies so memorable? The viewer understands the problems and obstacles the hero faces, his or her desires, how achieving that goal or goals will change the world– and it’s clear when the problem is resolved.

This scenario kind of sounds like a grant proposal, doesn’t it? As a grantseeker, you want your reviewer to understand the issues your “world” (the community or population you are serving) faces, what the “hero” (your organization or program) hopes to achieve, the obstacles the hero and world face, and a clear idea of what the world looks like when the problem is solved.The good news is, there is a solid formula that most movies follow that you can use for your next proposal. Here is a graphic of what almost every story ever told looks like:

This structure is used in almost every Hollywood movie, setting up a story that is engaging from the opening sentence, cohesive throughout, and that grips the viewer until the very end. While the exact structure of every grant proposal is different, here is a basic breakdown of how to organize the story of your organization or program in a Hollywood-worthy way:

  • Inciting Incident: The opening moment is designed to hook the audience. The best movies make you think, “Wow, this is going to be good! What happens next!?” No matter what structure the application requires, try to tell the reviewer right away who you are, what your program is, what you’re asking for, and how it will change the world. Movies have a few moments meant to hook the audience, while the grant writer has one or two sentences. You want reviewers to think, “That’s a worthy goal, now how will they accomplish it?”
  • Exposition: Why should the audience care about the story they’re about to watch? A good movie makes you care about the characters, understand their circumstances quickly, and root for them to overcome their problems. In a grant proposal, this is typically your needs statement and/or community description. You need to make the reviewer picture your target population and community, and the issues they are facing. Where movies have visuals, you have statistics. Movies pick only the most compelling and high-quality images to convey a message (and, importantly, they relate directly to the problem that will be solved). You should be picky too. Use just enough compelling and reliable data to prove there is a problem, but don’t overload your reviewer with pages of numbers.
  • Point of Attack: This is the moment in the story when the problem has a chance to be solved – when the hero gets their super powers. It makes the audience think, “That’s exactly what this world needs! We’re ready to tackle this problem!” In grant proposals, this is the organization description and background. Your super powers are your staff, history, evidence-base, or other proof that you’re good at what you do. It’s important that you tie this section directly to the problem. If the hero is fighting a giant underwater monster, the solution won’t be a high school football coach who can inspire their team. If the problem you present is low graduation rates, the reviewer wants to know how well you will tackle that problem specifically. Focus this section on your organization’s super powers (capacity) to solve the problem presented in the exposition.
  • Rising Action: This is the meat of the story – the journey that the hero goes on to solve the problem. You learn of the hero’s allies and the strategies they use when unexpected issues arise, and you can easily follow the actions they take to resolve the problem at hand. In your proposal, this will typically be split among several sections, including your program description, partners, lessons learned from past experiences, and systems used to deal with unanticipated issues. It is important that everything you put here relates back to your exposition and inciting incident. A football coach who creates a great team and seeks advice from their mentor may solve problem, but that won’t defeat a giant underwater monster.
  • Climax: The entire movie has been building to this moment. It is when the question, “Will this problem get solved?” is answered. It is clear that the giant underwater monster has been defeated. For your proposal, this is your outcomes section. These outcomes should directly tie back to the exposition/needs statement. If the hero has been fighting a giant underwater monster, the movie doesn’t switch at the end to show you a high school football team that overcame all odds to win the state championship. While that may sound silly, it’s a trap that many grant writers fall into. They set up a strong problem but, in the end, their outcomes don’t actually solve or even relate to that problem. For every issue you describe in your needs statement, there needs to be a measurable outcome you can deliver on. If you can’t deliver an outcome to solve the problem, don’t bring up that problem (no matter how compelling it may be).
  • Denouement/Falling Action: This is the proof that the story you just watched actually made a difference. You are reminded of the journey the hero took, and you see what the world looks like as a better place. In grant proposals, this proof is your budget and required attachments. Your budget, letters of commitment, 501(c)3 determination letter, and whatever else the proposal asks for are all proof you can do what you promise. Imagine the hero defeats the underwater monster and then, instantly, the movie cuts to the credits without any further resolution. How unsatisfying would that be? Could you trust that the hero actually defeated the monster? Is the world going to be OK? This approach could make a great movie unwatchable. The same is true for your proposal. Don’t leave the reviewer questioning your ability to pull off your amazing work; instead, make sure they have the proof needed to eliminate any questions that the solution you laid out will actually happen. As always, it must relate to the rest of your proposal.

Now that you know how Hollywood writes gripping stories, use the above six sections to outline a proposal. The next time you write a grant, pull it out and you’ll already have done most of the work for yourself! This approach will help ensure that your proposal is strong, connected, and grips the reviewer from beginning to end.


Contact: Jeff Andersen, Resource Development Officer,

Now’s the Time to Join the Cooperative Network of Nonprofits!

January 3, 2018

From our nonprofit education arm…

The Grants Collective is celebrating one year of launching the Cooperative Network for New Mexico’s Nonprofits in January 2018. It has been a wonderful year of supporting, innovating, and connecting our state’s nonprofit organizations, educational institutions, public agencies, and funder networks.

We invite you to join the Cooperative Network and contribute to the vibrancy of the state’s nonprofit community, especially as it comes to collaborating and successfully competing for large grants from out of state.

To celebrate its one-year anniversary and the plans we have for 2018, we are offering an 18% discount on an annual membership – a $90 savings!

The Cooperative Network is an online platform plus in-person events that better connect our nonprofit community.

The Cooperative Network is organized into three sections:

Find FundingThe Cooperative Network offers three grant calendars, all of which are curated for New Mexico to cut through the static and get you the most relevant opportunities: (1) Deadline-driven calendar, so you know what’s time-sensitive when it comes to your grant seeking, (2) Open opportunities, so you know what’s available to apply to year-round, and (3) Forecasted opportunities, so you can plan ahead.

ConnectThe Cooperative Network is designed to make collaboration easier and more efficient. You have the opportunity to connect via: (1) In-person events that include Brownbag Lunches, Curbside Consulting, Coffee & Conversations, Thirsty Thursdays, and Reading Circles. (2) Forums that include open discussions, closed permission circles, and special interest groups. (3) Social network capabilities that allow members to post to each other’s walls, tag members in conversations, and share with each other.


The Cooperative Network is a place for New Mexico nonprofits to up their games when it comes to grant seeking. The Learn section provides: (1) Resources such as templates, tips, and articles, (2) The Grants Collective updates about our network, and (3) Other philanthropy and grant seeking blogs that are relevant, locally or nationally.

These resources help subscribers pursue the best-aligned opportunities, improve capability and effectiveness in securing national dollars, and provide a formal avenue for collaboration and partnership in grant seeking. Your subscription gets you and a coworker access to the online members-only platform and in-person events.

If grants are – or should be – part of your fundraising strategy and you are a New Mexico based tax-exempt agency, consider joining the Cooperative Network by pressing the button below. Our standard subscription rate is $50 per month or $500 per year. This month, save $90 – or 18% – to $410 for an annual subscription!

The Politics of Charity: Philanthropy and the New Tax Law

January 2, 2018

Part II. The Johnson Amendment and Implications for Fundraisers

One of the most controversial provisions in the House version of the recent tax bill was the repeal of the Johnson Amendment. The proposed repeal was not included in the final version of the bill and the Johnson Amendment remains in place. However, a Presidential Executive Order was signed in May of 2017, restricting its enforcement, and the amendment continues to be a subject of fierce debate.

The Johnson Amendment is part of a long history of tax laws that regulate the political activities that charitable organizations, including religious institutions, can pursue while maintaining their tax-exempt status. Key legal milestones in that process include a famous 1930 case Slee v. Commissioner of Internal Revenue. In this case, the petitioner, D.G. Slee, had donated to the American Birth Control League, which he later claimed as tax deductions. The Internal Revenue Board disallowed these deductions and the court upheld their finding. In his ruling, Judge Hand determined that the purpose of the lobbying efforts of the League (repealing laws preventing birth control) was not directly related to the provision of its charitable services (education and free health care) and therefore did not qualify for tax exemption. A 1934 ruling shifted the focus from the purpose of lobbying activities to their extent. Since that ruling, allowable lobbying activities have been more clearly defined, and limits on acceptable lobbying expenditures were established (generally 20% of tax exempt expenditures, with some variance according to the total organizational budget).

Twenty years later, the Johnson Amendment, introduced by then Senator Lyndon B. Johnson of Texas and adopted on July 2, 1954, extended nonprofit restrictions to include endorsing political candidates. In 1987, congress further expanded this prohibition to include opposing political candidates. Today, under the current IRS code, 501(c)(3) organizations and institutions are “absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”

As decisive as this language is, the Johnson Amendment has rarely been enforced. But where it has been applied, it is often legally contested as conflicting with the right to free speech. One famous case involved revocation of the tax-exempt status of Christian Echoes National Ministry, for encouraging its member base to lobby their representatives for specific outcomes on legislation and endorsing then candidate Barry Goldwater for President. Christian Echoes challenged the revocation on the basis of the First Amendment but in 1973 the Christian Echoes National Ministry, Inc., v. United States of America decision upheld the IRS determination: “In light of the fact that tax exemption is a privilege, a matter of grace rather than right, we hold that the limitations contained in section 501(c)(3) withholding exemption from nonprofit corporations do not deprive Christian Echoes of its constitutionally guaranteed right of freedom of speech” and upheld “the principle that the government shall not subsidize, directly or indirectly, those organizations whose substantial activities are directed toward the accomplishment of legislative goals or the election or defeat of particular candidates.”

The Johnson Amendment recently became a matter for accelerated public debate during the 2016 presidential election and following the May 2017 Executive Order. Critics of the amendment continue to assert that it conflicts with constitutional guarantees of free speech, most notably for some faith leaders who consider sharing political convictions and endorsing candidates that reflect their values to be a meaningful part of ministering to their communities. But supporters of the amendment fear that a repeal would transform places of worship and charitable organizations into tools of political campaigns, turning charitable donations into a tax-deductible campaign finance loophole, and ultimately diverting resources from the spiritual comforts, or services and supports that so many nonprofits provide to people in need.

If charitable donations were to become essentially tax-deductible support for political campaigns, this would have an enormous impact on professional nonprofit fundraisers. Nonprofit development or fundraising is very much mission driven work, so it is not uncommon to find strong political or faith-based convictions among development professionals. But, unlike individual and crowd-sourced fundraising efforts, which are often very much about the personal beliefs and values of the fundraiser, professional fundraisers typically maintain a stance of neutrality in their work.

Grant writers for instance, are generally committed to serving nonprofits by helping them clarify their messaging, build their capacity, assemble stakeholder consortiums and other collaborations. This often includes partnering, as a neutral party, in designing programs and evaluation plans related to the grants they write and submit on the organization’s behalf. The primary purpose of the job is to facilitate funding for the services provided by nonprofits from the donors and grantors throughout the philanthropic community who want to help make that good work happen. Fundraising is a critical intermediary service, aligning the professional skills and expertise of the fundraiser with the missions of charitable organizations and the commitments and standards of dedicated philanthropists, always with the end goal of meeting urgent community needs.

Successful fundraisers must be collaborative at their core, and collaboration requires the ability to listen to, understand, and integrate diverse and often conflicting perspectives. There is something unique about this aspect of the nonprofit and philanthropic community circle, especially today when divisive, partisan electoral politics seem to penetrate all aspects of civil society. A statement by the Association of Fundraising Professionals in February of this year noted that the foundation of philanthropy is to “bring people together to advance causes and create change. People who believe in an issue—regardless of their creed, background, nationality, political leanings, or any other factor—unite to support a cause through giving, volunteering and other types of engagement. It doesn’t matter who you are as long as you support the issue and the cause.”

The tax code as it relates to nonprofits is complex and always evolving and there are still important issues to consider on all sides in the debate concerning the Johnson Amendment and where and how we separate charitable and political activity. But, it is important to acknowledge that political campaigns are about winning elections, not performing a social or spiritual service, which is the common existential basis of nonprofit entities. If the Johnson Amendment is repealed and charitable organizations and institutions direct their activities towards the competitive endorsement or opposition of political candidates it would alter the service-based end goal of nonprofit fundraising and erode its collaborative core, diminishing public trust in fundraiser’s integrity and a vital communal space where inclusive solutions can be invented, supported, and implemented.

In the conflict resolution and formal mediation fields, one strategy for reaching an effective and lasting agreement is to focus on problem solving techniques that are designed to encourage a focus on the real needs and interests of conflicting parties, instead of arguing, defending, and reinforcing positions. Similarly, partisan positions may be a political inevitability today, but those positions in and of themselves cannot solve problems or help people in need. Only listening to each other and working together can.


Contact: Myshel Prasad, Resource Development Officer,

The Politics of Charity: Philanthropy and the New Tax Law

January 2, 2018

The newly-passed federal tax legislation could have dramatic impacts on philanthropic giving, charitable organizations, and the work of nonprofit fundraising professionals. Nonprofits have long benefitted from itemized tax deductions for charitable giving, which have been a part of the U.S. tax code since 1917, and any changes in this area of tax law may have significant effects on donation levels. But, the potential impacts go beyond revenues. The allowable activities that nonprofits can pursue while maintaining 501(c)(3) status are also regulated by the tax code. In the hundred years since the individual donation deduction was established, the Internal Revenue Code regulations pertaining to charitable organizations have evolved to increasingly define and regulate legislative and grassroots lobbying while prohibiting charitable organizations from engaging partisan political activities, most notably through the 1954 Johnson Amendment. While the new law does not repeal the Johnson Amendment, changes to allowable activities under this area of the tax code could completely alter the social purpose and function of charitable organizations- and of those who work to support them. Part I of this article, The “Tax Cuts and Jobs Act” and Impacts on Giving explores the new tax law, its potential impacts on charitable giving, and possible strategies for moving forward. Part II, The Johnson Amendment and Implications for Fundraisers, reviews the history and intent of Johnson Amendment, the movement to repeal it, and the implications for nonprofits and especially nonprofit fundraisers.


Part I. The “Tax Cuts and Jobs Act” and Impacts on Giving

The final version of the new tax bill was officially passed on December 20th and signed into law by the President on December 22nd, 2017. The new law increases the standard deduction for individuals, couples, and heads of households to $12,000, $24,000, and $18,000 respectively, until 2025. Charitable gifts have traditionally been one of the most popular itemized tax deductions but under the new law, most middle and lower-income individuals will typically not have enough qualified deductions to exceed the higher standard levels, making itemization superfluous. The National Council of Nonprofits estimates that these higher standard deductions will decrease the number of those who itemize from 30% of taxpayers to less than 10% of taxpayers. Individual donors contribute over 70% of all funding to nonprofit organizations and according to Brian Gallagher of United Way Worldwide, 82% of all individual charitable gifts come from donors who itemize their tax return. Estimates of the potential reduction in charitable giving range from $13 to as much as $24 billion. However, the bill will also raise the limit on cash donation deductions for those in higher income brackets, who will continue to itemize deductions, from 50% to 60% of their adjusted gross income. This could help to balance projected losses, but may also widen the charitable giving divide by disincentivizing giving in middle and lower income tax brackets. This could potentially result in a less diverse philanthropic community, while giving the priorities of a smaller base of donors a disproportionate impact on nonprofit programming.

As it proceeded through congress, the new bill raised alarms for a wide range of charitable organizations, from The United Way, to the Salvation Army, and the U.S. Conference of Catholic Bishops. These organizations rely heavily on a large base of middle-income donors, who are more likely than their higher income counterparts to give to social-service agencies and religious organizations. But the greatest anticipated reductions in individual giving as a result of the new tax law are expected to occur for donors in the $50,000-$99,999 annual income range. In other words, at a time when government investment in the social safety net is diminishing and future cuts are likely, the organizations dedicated to serving the neediest in our communities, the homeless, the disabled, hungry children and families, may see the biggest drop in donations. Steve Taylor, Vice President of United Way Worldwide, worries the tax bill will force the organization to reevaluate its fundraising strategies to prioritize higher-end donors. “We don’t have any choice but to look to those higher-end donors more. We have to,” Taylor told The Washington Post. “But it’s not really what we want to do, and it’s not really healthy for the charitable sector in America.”

Other provisions in the new tax law that may indirectly impact nonprofit giving include a reduction in estate taxes and a $10,000 federal deduction limit on state and local income and property taxes. This reduction will have the most impact on high-tax states where state and local tax bills can far exceed this new limit, leaving donors with less to give. The new law also raises the estate tax exemption to over $11.2 million for an individual, which may lead to a decrease in charitable bequests, which traditionally have served the dual function of creating a lasting legacy for dedicated donors while reducing the future tax burden on heirs.

The full impacts of the new changes to the tax code have yet to unfold. But nonprofits, fundraisers, and individual donors can begin working together now to find creative ways to ensure that those who depend on their charitable support continue to receive it. Strategies to explore include:

Support the Universal Charitable Giving Act:

Since only taxpayers who itemize their deductions are able to withhold charitable donations, the new tax law is potentially calamitous by eliminating itemization for lower and middle-income tax payers. The Universal Charitable Giving Act (UCGA), was introduced in the Senate by Senator James Lankford (R-OK) but failed to be adopted. The UCGA would create an above-the-line charitable giving deduction for individuals who are not itemizing. As it proposed, individuals could not claim donations amounting to more than 1/3 of the standard deduction; raising that ceiling is important to ensure that the legislation does not actually have the effect of depressing larger donations. But reintroducing the UCGA could go a long way towards counteracting the anticipated giving reductions resulting from the new tax law.

Collaborate with Donor Advised Funds:

Donor Advised Funds allow donors to grow their philanthropic dollars over time. Donors make investments in the fund, typically starting at around $5,000, growing their charitable account until they choose to direct funds to a chosen charity. Donor Advised Funds have been controversial in the nonprofit world, primarily because unlike foundations, which are legally required to distribute 5% of their investment assets annually, Donor Advised Funds are under no such obligation. Additionally, donors receive their tax deduction the year the they contribute to the fund, not when the funds are disbursed to a specified organization. But under the new law, this could be an advantage. Donors could potentially combine the gifts that they would normally have given on a monthly or annual basis, invest those dollars into a fund, and stipulate monthly or annual disbursements to their chosen charities. This could allow midlevel donors to make a donation above the higher standard deduction and itemize for the tax credit, while still distributing smaller donations to multiple organizations.

Offer Options to Year End Giving:

The itemized tax deduction has been traditionally associated with a massive of influx of donations for nonprofits at the year’s end, and charitable organizations usually budget accordingly. In 2018, there may be a radical change in this established pattern and fundraising professionals will be working with their organizations, Board Members, and donor communities to plan accordingly and develop new giving options that allow them to continue receiving tax credits for their donations. For instance, without using a Donor Advised Fund as an intermediary, some midlevel donors may elect to plan their giving by “bunching” their gifts bi-annually, combining their annual donations to exceed the standard deduction threshold so that they can still itemize the gift, potentially incentivizing even larger cumulative donations from donors to the organizations they care about the most.

Make Your Case:

As United Way’s Sarah Caruso, President of the United Way Twin Cities told The Washington Post, “I’m not going to plan a retreat right now,” Caruso said. “I plan to go out and make the case for the need. And the need in the community is not changing.” As organizations enter the new year, it is important to remember that while the deduction for charitable gifts is been a powerful incentive, donors donate because they want to make a positive difference for their communities and the issues they care most about. The tax law has changed. But the good work that charitable organizations are doing and the good people who support that work have not.


Contact: Myshel Prasad, Resource Development Officer,


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