ISSUE #10: Role of Philanthropy

Philanthropy will wrestle with the impact of tax reform on the charitable sector and the effects of policy changes that undermine public support for populations in need.

The new tax bill rolls back the estate tax and eliminates the charitable deduction for most taxpayers, and therefore is expected to significantly reduce the overall amount of charitable giving. As a result, philanthropic grantmaking organizations may see increased requests for grant support from nonprofits. For community foundations, a reduction in giving also may have a negative impact on the creation of donor advised funds or continued gifts to existing funds.

The question of how to pay for tax cuts still looms large, and Republicans in Congress have indicated that many of the federally funded social programs that help meet the needs of low-income individuals and communities may be considered for budget cuts. If these cuts occur, foundations may feel the strain as public partners who deliver services are weakened. Some may begin to look more to state and local agencies as partners for community investment. The success of these efforts may largely depend on political will at the state and local level. In addition to increased partnership, some foundations may invest in advocacy efforts to increase political will at the state and local levels.

On a more positive note, the field of philanthropy has displayed a growing interest in issues of equity in the past year. Amid tightened public investment and social tensions, philanthropic attention to issues of equity in many forms – health equity, educational equity, racial equity, gender equity, etc. – is likely to grow.