Giving to charity continued to grow in 2018, but not as robustly as in the past. Overall giving increased by less than 1%, but the growth between 2016 and 2018 was a meaningful 7.1%. As has always been the case,  individuals and families contributed the lion’s share of giving at 68%, but their total giving declined 1.1% from 2017. The most significant increase in the percent given came from foundations, including gifts from family foundations and distributions through donor advised funds. Foundation giving increased to 18% of overall giving, a 7.3% increase over the previous year. Giving to the arts essentially held steady from 2017 and continued to represent some 5% of total overall giving.

Giving USA 2019 offers several important insights into the trends uniquely affecting museums and performing arts organizations. Here are a few takeaways to consider in planning for the upcoming year:

Larger gifts from high net-worth individuals should continue to be a focus.

According to the 2018 U.S. Trust Study of High Net Worth Philanthropy, 90% of high-net worth households gave to charity, with a quarter of them giving to the arts. The Quarterly Report, also referenced in Giving USA, found that the overall increase in giving in 2018 was driven by a 2.6% increase in gifts of $1,000 or more; gifts under that size declined by around 4%. While maintaining efforts to increase gifts at all levels, arts organizations should prioritize their focus on larger gifts from individuals, through upper-level membership programs, project-related major gifts, and campaigns.

Campaigns are an important tool for attracting major gifts.

Cultural organizations continue to benefit from campaigns, which crystallize institutional priorities into fundable opportunities for donors and encourage larger gifts. Theatre Communications Group recently reported that 40% of theaters were currently in a capital campaign, and another 38% completed a campaign between 2012 and 2017, leading to a 23% increase in overall giving and a 55% increase in trustee giving during this period. This year’s Giving USA also reports that organizations in every region of the country received multi-million-dollar gifts in 2018, supporting capital, endowment, and programmatic initiatives, listing a sample of 18 representative gifts of $10,000,000 or more. As fewer individuals are giving and a greater percentage of philanthropic revenue is coming through larger gifts, now is the time institutions should consider organizing and launching a campaign.

Don’t discount online giving.

Blackbaud Institute’s 2018 Charitable Giving Report showed that online gifts represented 9.5% of overall giving to arts organizations in 2018, and the 5.8% growth in online giving to the arts outpaced other non-profits by four times. While this noteworthy growth rate in overall online giving to the arts may be a function of the membership culture unique to museums, these trends illustrate the significance of making online giving a convenient option for donors and members, especially considering the decrease in smaller gifts.

Despite the complex issues that affect charitable giving in our country – from policy and tax law changes to social, economic and other factors – the voluntary, philanthropic support of arts and cultural organizations has never been stronger, with donors giving $19.5 billion to the arts in 2018. Reflecting on the numbers and trends outlined in this year’s Giving USA report, this is a time for optimism and opportunity, as we engage those donors whose generosity lights the fire of creativity, casts light on the human condition, and brings beauty and enjoyment through our nation’s arts and cultural organizations.

Takeaways From Giving USA To Help You Plan Better:

Giving to the Arts: The Numbers

Giving USA 2019: The Annual Report on Philanthropy for the Year 2018, was released in June, and amid a complex climate for charitable giving, individuals, bequests, foundations and corporations gave an estimated $427.71 billion to charities in 2018.

Giving to arts, culture and humanities organizations stayed relatively flat, increasing 0.3% to $19.49 billion.

• In current dollars, giving to arts, culture, and humanities increased 13.4% between 2016 and 2017, and increased 0.3% between 2017 and 2018. Cumulatively, current-dollar giving to arts, culture, and humanities increased 13.8% between 2016 and 2018.
• Adjusted for inflation, giving to arts, culture, and humanities increased 11.1% between 2016 and 2017, and declined 2.1% between 2017 and 2018. Cumulatively, giving to arts, culture, and humanities increased 8.7% in inflation-adjusted dollars between 2016 and 2018.
• Contributions to the arts, culture, and humanities subsector comprised 5% of all charitable donations in 2018.
• Donations to the arts, culture, and humanities subsector reached the highest inflation-adjusted amount record to date in 2017, and remains the highest to date.
• Donations to the arts, culture, and humanities subsector have amounted to between 3% and 5% of total giving over the past 40 years.

More information from the Giving USA 2019 report can be found here.

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As I head for Phoenix for AAM 2018, the annual meeting of the American Alliance of Museums (May 6-9), I have been exploring what people will be talking about at this year’s conference.

Museum Fundraising Strategies

One topic that caught my eye and captured my imagination was the subject of community engagement curators (CECs). An increasing number of museums and cultural centers are adding CECs to their staffs to build two-way conversations about how to make our work more relevant to our neighbors and to give them a voice in what we do within and outside the museum walls.

Community Engagement for Museums

With tight budgets and a long and ever-growing list of good ideas, it is tempting to think that we can cover community engagement in episodic ways—by having days for specific audiences, encouraging the use of social media (Instagram anyone?), and promoting partnerships with schools and leadership organizations.

The challenge is to sustain and broaden this engagement and help it thrive. While, yes, this is everyone’s job, putting someone on point means that you are serious about the need to innovate community-based programs, involve people beyond your “inner circle” in program development, and measure the impact in terms of what your community thinks and how it responds.

As Elizabeth Merritt aptly writes in her blog for the Center for the Future of Museums:
“At their core, museums are storytellers, but whose stories are we telling? How are we telling them? Are we reaching out to and co-creating with our communities in a culturally competent manner?”

The Role of the Community Engagement Curator is on the AAM program for Monday, May 7, at 1:45 pm and will feature community curators in children’s, art, anthropology, and history museums. For more on this topic, visit the AAM blog.

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Here are some of the key provisions related to philanthropy.

• A doubling of the standard deduction to $12,000 for single taxpayers and $24,000 for married couples filing jointly.
• For those who itemize deductions, an increase from 50 to 60% of adjusted gross income on the limit of cash gifts to qualified charities and from 30 to 60% on gifts to foundations. The 30% limit for gifts of capital gains property would remain.
• Removal of the limit on deductions for higher-income taxpayers.
• An increase of the current estate tax minimum of $5.9-million to $10-million with the tax phased out in 2024.

There are other provisions impacting the nonprofit sector such as a 20% tax on compensation over $1-million among the five highest paid employees of a not-for-profit organization; tightened rules on donor advised funds; replacing the two-tier excise tax on foundations with a flat 1.4%; and, requiring foundations accepting donations of art to exhibit each piece for at least 1,000 hours each year.

The impact of any one of these provisions is still being sorted out. Some preliminary estimates are that they might cause giving to drop by as much as $14-billion from the $390-billion given in 2016. Some changes, such as the increase in giving limits and the removal of deduction limits might increase giving, while some might reduce it. The impact of others, the elimination of estate taxes for instance, may not be as clear.

With the House bill drafted to go into effect January 1, 2018, many organizations are already well into their planning for the 2018-19 year. While we don’t know what will eventually come out of Congress, one thing is for sure: It is better to have a plan and not need it than to arrive at January 1 with no plan for dealing with a new reality that promises to confuse donors and discourage charitable giving to our museums.

We are advising our clients about ways to fundraise effectively in a fast-changing environment. Contact us for more information or assess your Campaign Readiness.

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The Alexander Haas Museum Services partner team will moderate two conference sessions in Atlanta:

Sunday, April 27 8:30 AM
Small and Not-So-Small Museums, All with Big Ideas: Alexander Haas Partner Paul Johnson will lead a discussion with the leaders of two museums that are smaller in size and big on vision for their museums. Joining Paul are Karen Brosius, Executive Director of Columbia Museum of Art, Columbia SC; Dane Pollei, Director and Chief Curator, Mabee-Gerrer Museum of Art, Shawnee, OK, and Karyn Flynn, CEO and Executive Director, Bay Area Discovery Museum, Sausalito, CA.

Wednesday, April 29 10:45 AM
How an All-Volunteer Band Raised $8-Million During the Recession: Alexander Haas Partner Sandra Kidd will introduce the remarkable story of how a determined group of volunteers put together a public-private partnership that has created not one but two new venues to celebrate the music and culture of the Carolina Piedmont. She will be joined by volunteer leaders J.T. Scruggs, Earl Scruggs Center; Martha “Brownie” Plaster, founder and past chair of Destination Cleveland County; and Emily Epley, Executive Director of the Earl Scruggs Center for Music and Stories from the American South.

For more information on the 2015 AAM Annual Meeting and Expo, visit www.aam-us.org.

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See what two of our Alumni Clients are doing:

• For more information on Reynolda House Museum of American Art: click here
• for more information on the High Museum of Art: click here

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In the fourth edition, CFM continues to explore emerging trends and events shaping the world. The Alliance’s CFM helps museums explore the cultural, political and economic challenges facing society and devise strategies to shape a better tomorrow. CFM is a think tank and R and D lab for fostering creativity and helping museums transcend traditional boundaries to serve society in new ways. Alexander Haas is proud to be a sponsor of AAM.

Click here to download a FREE copy of the report.

Click here for more information on the American Alliance of Museums.

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Perhaps because whenever I deliver a session on IRS rules and regulations I include commentary on the state of the charitable deduction, I have been asked many times since November 8th, “What do you think now?” Well, it is a good question to ask, but I am probably not the best person to answer. While I may be opinionated (for those that know me, that might come as a shock!), there clearly are better-versed professional experts in this area.

But, as I have been asked for my opinion so many times since November 8th, I have spent some time pondering. Quite honestly, I think it is way too early to make a prediction. But a number of thoughts have come to mind.

In the title of this missive, I intentionally used “elections” in the plural form. I think it is important that we look at the entirety of the political landscape – not simply the results of an election for one office. And I do believe that we can learn from history. Not that history might, or even could, repeat itself, but that it can inform us to some extent.

So, when was the last time the Republican party held the White House, the House and the Senate? Contrary to some reports, it was not after the 1928 elections – the year before we fell into the Great Depression. It actually wasn’t that long ago – just a decade or so – during the George W. Bush administration (2003-2007), with the greatest numbers of Republicans serving during 2005-2007.

Why is this relevant? It was that same 10 years ago that the Pension Protection Act of 2006 was enacted with substantive changes that affected charitable giving. While we can thank PPA 2006 for inventing the IRA Rollover, do remember that this was not a new charitable deduction but, rather, offering a tax-free withdrawal available only to individuals 70.5 years or older. PPA 2006, however, did impact charitable deductions of property gifts, reducing the allowable deduction to cost-basis for unrelated use gifts. There were a few other “limiting” provisions including the “recapture rule,” and several impacts on contributions of life insurance.

It should come as no surprise that tax changes are likely. According to the Wall Street Journal, we saw new tax legislation passed during the first terms of Reagan, Clinton, George W. Bush and Obama, but tax “changes” do not necessarily mean changes to charitable deductions. Or do they this time?

President-elect Trump favors an increase in the standard deduction, and a cap on Schedule A deductions. The net effect will be fewer itemizers for the lower income filers – meaning a charitable deduction isn’t relevant, and little tax-incentive for giving more for those in higher tax brackets.

Speaker Paul Ryan wants to eliminate all deductions EXCEPT for mortgage interest and charitable deductions, while House Ways & Means Chair Dave Camp wants to restrict charitable deductions to only those that exceed 2% of Adjusted Gross Income.

Given the persuasions of current/new political leadership, I do think it is likely that we will see some tax legislation that will serve as an inhibitor for charitable donations to be used as a way to reduce an individual’s tax burden. However, if there is any good news, I have heard little of the “urgent” talk about completely eliminating the charitable deduction that was fairly common after the 2010/2 elections.

The American Alliance of Museums has important key takeaways from the election, which includes specific examples of what museums can (and should) do to reinforce the importance of their cultural significance to our society.

All this is a long way of saying that change is in the wind, and it is difficult to tell which way the wind will blow. I personally do not believe that the sky is, or will be, falling.

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At the end of a productive day, we walked back to see some of the Museum’s contemporary works recently installed in an airy gallery that overlooks the Gardens and the St. Johns River. As I stood there admiring the paintings, the sculptures, the installation and the view, I thought about how the Cummer came to be, and what it has become.

The Cummer was born in 1958 when philanthropist and arts lover Ninah Cummer announced she planned to gift her personal art collection and her riverfront estate to establish a new art museum. Mrs. Cummer asked Jacksonville’s civic, community, and cultural leaders to support the museum that would be built on the estate following her death.

Jacksonville rose to the challenge.

Today, the Cummer has a strong permanent collection and is celebrated for its diverse exhibitions and programs (when I was there, a starkly moving civil rights photography exhibition was on view, a loan from our own High Museum of Art in Atlanta). The beautiful Gardens (listed on the National Register of Historic Places) have been restored with care, and literally extend the Museum beyond its walls.

As fundraisers and fundraising consultants, we often talk about vision. From experience, we know that vision is both rare to find–and powerful in its presence.

Visionary thinkers are able to see what does not yet exist. Visionary leaders are able to make it happen. Ninah Cummer was a visionary. She saw something that others could not yet see, and then she put her faith in the Museum’s future generations of leaders to make it happen.

Thank you, Mrs. Cummer!

Photo Credit: The Cummer Museum of Art & Gardens

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By Sandra Kidd,
Partner

 

Last year, the world of art and artists lost a friend when Herbert Vogel , noted collector of minimal and conceptual art, died at age 89 in New York City. For half a decade, Herbert Vogel and his wife Dorothy-or “Dorothy and Herb” as they liked to be known-steadily acquired a collection of work that grew alongside the careers of the artists they followed, befriended and collected.

Living in a modest one-bedroom apartment and bringing their works home on the subway, the Vogels built their collection of 5,000 pieces on the civil service salary of a postman (Herbert) and a librarian (Dorothy). Then, starting in 1992, they started giving it all away.

The National Gallery of Art was the first recipient of a major gift from the Vogels’ collection, but they also wanted to ensure that these artists’ work were accessible across America. From this desire was born theFifty Works for Fifty States project in 2008, through which the couple gifted 50 works of art to each of the fifty states, with one stipulation: that the works be exhibited to each museum’s visitors within five years.

At the beginning of 2012, the couple turned their focus once again to Alexander Haas client the Columbia Museum of Art, gifting nearly 600 additional works to the CMA, the South Carolina representative in theFifty Works for Fifty States project. Previously, they also had made a second major gift to the National Gallery of Art. The Gallery now owns 1,100 works gifted by the Vogels, the CMA owns 650, and another 2,900 are in museum collections across the county, from the Portland Art Museum in Oregon to the Portland Museum of Art in Maine.

Herbert Vogel, who retired in 1980, never made more than $23,000 on his postal service salary. The couple devoted Herb’s paycheck to buying art. They could have enriched themselves by selling off their collection, which contained works by well-known names such as Chuck Close and Sol LeWitt, but instead they chose to share what they loved with future generations of museum-goers.

Through our work with museums large and small, we at Alexander Haas are fortunate to be able to meet some of the Vogels of the world: patrons whose passion for collecting gives wing to the spirit of philanthropy. As we celebrate the remarkable life of Herbert Vogel, we hope that you have your own “Dorothy and Herb” in your museum family-or in your future!

But most importantly-regardless of the size of your organization-cultivate people with the capacity to impact your museum. Cultivate people who will make gifts to advance your museum and support your mission. Cultivation, solicitation and stewardship cannot be replaced nor shortcuts taken…or the donor will create their own vision and fund it.

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By Jim Hackney,
Managing Partner

 

As fundraising consultants, we are energized when our work with one organization offers insight into our work with other organizations. As I write this, I am days away from traveling to Greece where I will be an Arts Envoy for the U.S. State Department. I am honored to be a keynote speaker in a workshop designed for the Greek museum professional community. With the Greek economy in such turmoil, the Government-supported museums and cultural sites are not receiving the level of public funding they would historically. This workshop is meant to invigorate those organizations and show them how to raise private donations-something they are not accustomed to doing.

Preparing for two different presentations, and nearly a week of on-site consulting with several Greek organizations has forced me to go back to the very basics of how to start a philanthropic program. Going back to the basics literally takes us back to Greece where the tenants of Western Civilization were born. And the basic tenant of philanthropy is private support. However, there is not a tremendous amount of private support for Greece’s museums. So, we start at the beginning. How do you ask someone for a gift? What compels someone to make his or her first charitable donation?

Looking back at how the United States developed this system of private support brings me to my initial declaration that working with one organization can often offer great insight when working with another. While working with the National Constitution Center in Philadelphia, I was reminded once again how we are given the right to join together and do something for the public good. This comes from the U.S. Bill of Rights where we are able to “freely associate” with others.  So, we join together, pool our funds and start a museum, for example. This edict should easily be incorporated into the Greek system as well.

As you can see from the chart below, in 1986, governments-local, state and Federal-levels-supported 40 percent of all the operational budgets for museums throughout the United States. By 2008, this source of funds dropped to 24 percent. The difference has been made up by private gifts. How did we do it? The answer can be seen in the most recent Giving USA data, which shows that 73 percent of all charitable support is given by individuals. Ask yourself, What are you doing to make sure you are keeping a diversified donor base and keep your museum’s private support growing…because today, this is a worldwide necessity for all our charitable organizations.

 

We have managed, some years better than others, to support our cultural organizations with private support, even as government support has dramatically decreased. I am optimistic that our lessons can be translated into Greek lessons on private philanthropy, much like early Greek thought has helped shape our civilization.

The word philanthropy comes from the Greek word philanthrōpos ; meaning humane, benevolent. I look forward to learning from the Greeks, where philanthrōpos was first recognized, and am hopeful that sharing basic fundraising lessons with our colleagues there will help their organizations thrive and continue to protect and display the treasures that the Greek people have created throughout time.

After all, it is our history too!

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