GIVING & In a K-Shaped Recovery, Nonprofits Should Lean on Major Donors. #HarvardBusinessReview

… When nonprofits are under-resourced, their natural response is to turn to their donors. But is it realistic to expect a healthy stream of charitable contributions in the midst of the worst economic situation since the Great Depression?

Absolutely — if you approach the right people. Because even as unemployment soars, as tens of thousands of businesses close, and as default and eviction rates rise, a small but significant portion of the population is doing just fine, thank you.

Welcome to “the K-Shaped recovery,” in which the experience of the fortunate few is vastly different from the reality faced by the miserable many. Most of us are doing badly —some, desperately so — but others are doing well.

… People naturally project their personal financial worries onto others and assume that everyone around them is feeling the same degree of pain. But if you’re a nonprofit leader marinating in financial anxiety, I can assure you that many of your supporters are not feeling any financial pinch at all. In fact, those wealthy few may even be a bit more comfortable than usual, because their travel and entertainment plans have been curtailed by the pandemic.

This bifurcated economic recovery will undoubtedly amplify the trend of the last 40 years, where more and more charitable giving is coming from fewer and fewer donors. “Gilded Giving 2020,” a report from the Institute for Policy Studies, details this trend. The percentage of American households donating to charity dropped from 67% in 2002 to 53% in 2016, a decline that the report’s authors, Chuck Collins and Helen Flannery, blame largely on the increased economic precarity of the middle class. The report also notes that the 2017 Tax Cuts and Jobs Act, which effectively removed the charitable-deduction incentives for tens of millions of taxpayers by doubling the standard deduction, served to dampen charitable giving further among middle- and upper-middle-class families. It does not take much imagination to presume that this troubling trend will accelerate in the era of Covid-19. Many Americans got out of the habit of giving to charity in the Great Recession. Many more will join them in 2020 and beyond.

Read more at … https://hbr.org/2020/09/in-a-k-shaped-recovery-nonprofits-should-lean-on-major-donors?