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Nonprofit advice during the Trump administration

June 11th, 2018

I am not among those who fear the people. They, and not the rich, are our dependents for continued freedom. —Thomas Jefferson

I was in Manchester, Vt., recently, and saw a memorial to Thomas Jefferson that included a number of quotes I had never seen or heard before. The quote above reminded me of the coincidental date of April 1 this year, representing both April Fools’ Day and the religious belief in the Resurrection of Jesus Christ. Since Jan. 20, 2017, the country and, most notably nonprofit organizations, have experienced a roller coaster ride that appears to have resulted in tumult, seminal events and, some would say, chaos. As a result of the foregoing, and with the recent enactment of the Trump tax legislation known as the Tax Cuts and Jobs Act of 2017, every nonprofit must revisit and re-evaluate its strategic plan goals and objectives. As is my usual custom, I have provided below 10 topical areas impacting on the future fiscal viability of substantially all tax-exempt organizations.

We live in a country that thrives on 24/7 media coverage, which has many of us baby boomers praying for a return to the rather docile decade of the 1950s. Nostalgia, however, and a return to the past are not likely for the foreseeable future. Therefore, recommendation No. 1 is that every nonprofit board and management team must revisit and reassess its strategic plan before April Fools’ Day 2019. Your organizational fiscal viability, sustainability and ultimate survival may depend on your ability to develop strategies in the next 12 months that will position your organization for future success.

In the spirit of resurrection and rebirth, and with the absence of the practical jokes typically initiated on April 1, let’s review how the events of the past 14 months may or will change the future direction for your organization over the next 12 months.

Immediate decline in charitable giving—The recently enacted Trump tax legislation has a triple-whammy of negative incentives for both corporations and individuals to continue the historical level of charitable contributions, as follows:

The estate tax exemption is now at $11.2 million. In order to benefit from a deductible charitable contribution, joint filers must have more than $24,000 of deductible expenditures, recognizing that the state and local tax deduction is now capped at $10,000 per year.

The reduction in the corporate tax rate to 21 percent may help salary levels and bonuses for employees, but effectively reduces the value of a corporate charitable contribution by more than one-third.

Government budget deficits threatening health and human service funding—The fact that we waited until March 2018 an approved federal budget for the current fiscal year that started Oct. 1, 2017, foreshadows continued decline in financing health and human services for 99 percent of Americans.

Trickle-down economics—Those who refuse to acknowledge or learn from past mistakes need to read any book that describes the reasons for the Great Depression. $20 trillion and the $1.5 trillion reduction in federal tax revenues over the next 10 years should get your attention.

Immigration reform—I was in Washington, D.C., this month and observed something that surrounds President Trump every day he is in Washington or at his Mar-a-Lago retreat in Palm Beach, Fla. That is, virtually every support services position in hospitality, hotels, restaurants and other low-pay positions was filled by an individual from one of the many minority populations that form the backbone of America. In fact, at the Capital One Arena, I did not see one Caucasian working as an usher, concession stand attendant or janitor. Enough said regarding more Norwegians and fewer Mexicans.

Drug and alcohol abuse, social service supports—There will always be more demand than qualified access to support services in the five A’s of healthcare: Aging, Alzheimer’s, AIDS, Alcohol and Accidents. “Nobody knew healthcare could be so complicated,” other than anyone who has worked in or been served by a healthcare organization. The less we hear about repeal and replace, the more predictable our future healthcare delivery system might become. We should be more focused on bioethics, extension of life in relation to quality of life, and the cost of technology advancements. That is, at age 65, should I be entitled to two new hips, knees, shoulders, ankles and soon-to-be-available wrist replacements?

Elimination of market competition—The extraordinary growth and impact of companies such as Amazon, Microsoft, Google and Walmart, among many others, will continue to predict the future of market dominance in health and human services from enormous, dominant regional delivery systems. For example, the State of Pennsylvania has essentially three healthcare systems that dominate service provision for hospital in- patient and outpatient services. Even in New York, we now have every hospital in the state in 1 of 25 Performing Provider Systems. For more on this topic, please Google “Ascension Health.”

Deterioration of the urban core—I consider it to be borderline criminal and, at a minimum, embarrassing that the City of Rochester has the highest poverty rate for children in the entire country. Our urban educational system is broken, and housing, food and other basic life supports are not available in most American cities, including Rochester. Those of us who have pursued and been successful at the white flight to suburbia have a moral obligation to not only worship but also live the Beatitudes. As one of my favorite 60s lyrics, as appropriate today as it was then, goes, “Hate your next-door neighbor, but don’t forget to say grace.”

Support for arts, cultural and fraternal organizations—Please read the book by Robert Putnam, “Bowling Alone: The Collapse and Revival of American Community.”

Personal accountability and realistic expectations—On the positive side of my ledger, I am extraordinarily optimistic and hopeful that tragic events, like the recent school shootings, will result in a better future for each and every American who accepts the concept of personal accountability. As a starting point, if the vast majority of Americans believe in an afterlife, we must accept the reality of mortality.

Radical generosity and random acts of kindness—There is a recent movement in this country started by members of the 1 percent segment of wealthiest individuals. Bill Gates, Warren Buffett, and others have made a commitment to gifting 50 percent of their wealth to charitable causes. This movement has prompted significant interest in the concept of “radical generosity.” Radical generosity is defined as “tithing on steroids”—that is, donating up to 90 percent of your annual income, rather than the traditional 10 percent tithe, which originated seven centuries ago.

Each and every day, I strive to perform a random act of kindness, usually for someone less fortunate than I am. A recent example was representative of how satisfying kindness can be. I was buying a ticket to a sporting event from two individuals commonly referred to as scalpers. I asked for the cheapest ticket available at $40 and, after some banter, I gave them $60 for the same cheapest ticket and said, “You certainly need this more than I do.” I was thanked profusely, and after walking more than 100 yards away, I heard the yell from behind me: “Man, no one has ever done that to us before. Here’s a ticket to sit on the floor, enjoy the game.” So, in addition to random acts of kindness, never forget to pay it forward.

Gerald Archibald is a partner serving both of our Rochester, NY, and New York City offices.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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