December 17, 2018

Monday, December 17, 2018

Legislative Update

During a late-night session of the Michigan House of Representatives on Wednesday, two bills designed to restore the community foundation, food banks and homeless shelter charitable tax credits passed with strong bipartisan support. The vote tallies for HB 6433 and HB 6434 were 104-5 and 103-6, respectively. 

As CMF recently reported, HB 6433 and 6434 restore a vital set of tools for Michigan philanthropy that were eliminated in 2011. 

The bills provide Michiganders an income tax credit equal to 50 percent of the amount contributed, up to $100 for individual filers and up to $200 for joint filers, for food banks, homeless shelters and community foundations with assets of at least $1 million or more. 

The bills will now move to the Senate and could go for a vote as early as Tuesday, then on to Governor Rick Snyder's desk before the end of the lame duck session.

The Senate had previously taken committee action on SB 405.

From 1989 to 2011, Michigan enjoyed access to state tax credits to incentivize giving in Michigan. Research from the Dorothy A. Johnson Center for Philanthropy showed a significant decline in giving (at levels targeted for the tax credit) after the elimination of the tax credits.

The Johnson Center curated a digital series on tax policy that included deeper insights and analysis on tax policy and the charitable sector.

CMF will be monitoring any updates and developments from the Legislature and the governor as this important legislation is considered.





What’s ahead in Michigan philanthropy in 2019?

Q&A with Kyle Caldwell, president and CEO of CMF

As we look ahead to 2019, what are some trends that are emerging in philanthropy?

Caldwell: First, it’s probably important to understand what isn’t likely to change. The overall areas of giving are not likely to shift. The latest data on giving in the U.S. still shows that charitable donations to religion, education and human services are the top three categories with giving to foundations following a close fourth. These have been relatively consistent for the past few years. 

One trend to look out for is the impact of the economy and the stock market—will they remain on growth, flat or downward slopes? The U.S. and global economies have been on upward curves since the start of the recovery from the great recession. Some are questioning whether we are going to maintain the growth or see some type of market recalibration. In Michigan, our economy is still very much tied to manufacturing which has a cyclical nature and our state has been on a fairly steady recovery slope for a good part of the last decade. Philanthropy has benefited from the market growth until most recently. Still, there remains a significant income, wealth and quality of life disparity for many that philanthropy will continue to work with other sectors to try and address.

Are there other priorities you see on the horizon for CMF or more broadly, for philanthropy? 

Caldwell: There are several of course, but the one that seems the most salient for Michigan communities is critical partnership between Michigan’s units of government and the philanthropic sector. Michigan has become “ground zero” for public-private partnerships. Many look to the Detroit bankruptcy as an example, but there are several others including Kalamazoo’s Promise and the Foundation for Excellence. The city of Grand Rapids and key philanthropic institutions have been working to revitalize the downtown and region through its Grand Vision master plan and recently retired Grand Action. The city of Flint has been working to address critical water infrastructure challenges with the support of major local and international foundations and nonprofits. As more Michigan municipalities grapple with key challenges and explore new innovative opportunities, philanthropy will be looked to as a critical partner. 

One year ago, we were discussing the potential impact of the tax reform package on charitable giving. What do we know now?

Caldwell: The 2017 Tax Cuts and Jobs Act changed a number of provisions in the tax code for charitable organizations that we won’t know the full impact of for a few years. For example, we aren’t fully certain if changes to the charitable deduction (while preserved, now must compete with other tax deductions) will increase or decrease giving to charities. Many tax filers were being advised to advance their giving to maximize their deductions before the tax code changes. This could represent a surge in giving temporarily, but long term we will have to see what the overall impact will be on annual giving. 

The other outcome is a little clearer—some significant confusion. As a result of some of the changes we are now working with the U.S. Department of Treasury to understand the regulations around changes to Unrelated Business Income Tax (UBIT). The law now taxes a number of fringe benefits including transportation assistance even when the community requires it. While Congress may have been working to provide more even enforcement of the tax law, UBIT changes have targeted nonprofits of all sizes, even those not generally required to fill out 990-T tax forms. Unfortunately, it looks like the confusion may continue.

Governor-elect Gretchen Whitmer takes office in the new year. How are CMF and the Office of Foundation Liaison (OFL) engaging with the new administration?

Caldwell: CMF and the OFL have been engaged on three fronts since the early fall. The first is that OFL and the Advisory Council have been working with Governor Rick Snyder’s administration to focus on the remaining priorities of philanthropy and the administration. Second, CMF reached out to both gubernatorial candidates, Bill Schuette and Gretchen Whitmer’s campaigns, to explain the work of the OFL and the long-standing tradition of philanthropy working with the executive branch to prioritize opportunities for partnership. Leaders in both campaigns agreed to continue OFL in their respective administrations. This week, Governor-elect Whitmer is convening her transition policy staff with the OFL and CMF Board members to lay out their preliminary priorities and begin the dialogue for partnership. We expect to continue robust engagement with Governor Whitmer’s administration as well as with the Michigan Legislature.

What are you anticipating will be the key legislative priorities for philanthropy, particularly during Foundations on the Hill?

Caldwell: We have some exciting opportunities to engage with policy makers especially around key issues important to communities including tax policy and education, but most important to philanthropy, we have a number of new lawmakers who need to understand philanthropy. 

Come January, four freshmen - Rashida Tlaib, Andy Levin, Haley Stevens and Elissa Slotkin - will join 10 incumbents who were reelected to Congress. Developing a keen understanding of philanthropy’s role in communities will be important for the new and returning members working in the 116th U.S. Congress.

With these changes in membership overall, we also know that there will be changes in the leadership in the House and Senate oversight committees for the sector. New leaders have shared some of their priorities including understanding the growth of Donor Advised Funds, endowment payouts, and the new ways the next generation of philanthropy wants to engage in their giving.

Let’s talk about your listening tour. What would you like CMF members to know about these conversations scheduled around the state?

Caldwell: Shortly after I was offered the honor of serving as CMF’s next president, I realized that I was the first external hire in over 40 years. While I have worked in the Michigan philanthropy infrastructure field for most of my career, knowing CMF from the perspective of its members is a gap for me. At the same time, philanthropy—locally, regionally and globally—is changing rapidly. Not since the tax reform of 1969 has our field faced as complicated a changing landscape as we face today. Congress is increasingly interested in how philanthropy governs itself and expends its resources. Local communities are relying on philanthropy as “first responders” in many man- and nature-made disasters. Corporate, family, community, private and new forms of giving are rapidly changing and are striving to work differently with a greater emphasis on impact than ever before. Our world is changing—politically, demographically, economically, environmentally—and philanthropy is at the front edge of exploring how society needs to adapt.

The tours, which we worked to make geographically diverse and representative, are designed to serve as a conversation among Michigan philanthropists and sector champions about these changes, how we might think about working differently and how CMF can help increase the impact of Michigan philanthropy. The conversations will inform CMF’s future strategic planning efforts while also initiating local dialogues to identify common challenges and opportunity for the field. 

Want more?

Register to join Kyle at one of his four stops on his Listening Tour.

Connect with Kyle.






Philanthropy and Digital Civil Society: Blueprint 2019

In her 10th annual industry forecast, philanthropy expert and scholar Lucy Bernholz highlights challenges, big ideas and predictions for the coming year in Philanthropy and Digital Civil Society: Blueprint 2019.

Bernholz, senior research scholar at Stanford University’s Center on Philanthropy and Civil Society and director of the Digital Civil Society Lab, is a highly valued thought leader in the sector and has a long relationship with CMF.

In her 10th edition of the Blueprint, Bernholz dedicated the publication to Rob Collier, former president and CEO of CMF. She writes, “Rob has been a friend, mentor, and luge teammate. His adventurous spirit and commitment to the public good has inspired me in ways too numerous to count.”

In the Blueprint, Bernholz digs into challenges facing the social sector and our civil society, calling attention to the current landscape of tax policies, declining public trust, data governance and what’s needed for the future. 

An excerpt from the Blueprint states:

  • Tax incentives for giving are going to matter differently. Crowdfunding already blurs tax incentives. Standard deduction changes mean most young donors won’t take exemptions.

  • Nonprofits are not as “haloed” as they once were. Trust barometers, data breaches and young people know that there are lots of ways to do good. There may be a new structure that replaces nonprofit status as the seal of trustworthiness and mission focus.

  • Giving happens everywhere, but we’re doing less of it. Giving opportunities are now folded into online gaming platforms and other systems as well as into dating apps. We need to study and understand how people think they’re contributing their time and money. We need to understand how donors behave when they’re surrounded by choices, asked all the time and offered digital options as a default.

Bernholz’s research led her to call for those with influence to diversify their circles and to welcome new insights and new voices that can help shape the future for civil society.

“We need big ideas, big ways of sharing and big ways of allowing dispersed people to collaborate,” Bernholz said.

Beyond those findings, Bernholz once again released her predictions for the new year.

U.S. predictions

  • Aggregate U.S. giving will continue to rise but the total number of givers will continue to decrease.

  • Making sure your organization is in the database of Alexa/Siri/Google Home will replace search engine optimization as a key marketing strategy for nonprofits.

Bernholz predicts that funders will also engage in funding census outreach, noting that many states and communities are working to ensure an accurate and complete count in 2020.  

“The census is a bedrock of our democracy – so much so, that it’s required by the sixth paragraph of the U.S. Constitution,” Bernholz told CMF. “Energy and dollars that are spent to ensure that the count is as accurate as possible in reflecting the breadth and diversity of our nation are investments in a just society that will be leveraged for the next decade.”

Noting the Michigan Nonprofit Association (MNA) and CMF partnership where more than 30 CMF members have provided $4.7 million to support the Michigan Nonprofits Count Campaign (NPCC), Bernholz said, “The Michigan philanthropic and nonprofit community is a leading example of this systemic, long-term thinking.”

Global predictions

  • An “Internet of Things” hack involving a nonprofit – drone, car, medical device – will cause significant damage.

  • Cyber insurance will become a budget line item for every nonprofit and foundation.

  • Giving via video game platforms and streaming sites such as Twitch will get mainstream attention.

Bernholz holds herself accountable in the annual report, reflecting on what she got right and wrong about the past year. She was correct on 8 out of her 12 predictions for 2018. Here are a few of the notable predictions that came true:

  • There will be more big-ticket philanthropic partnerships between foundations and individual donors to aggregate capital.

  • Voice-activated giving will make headlines.

  • Tech companies will increase their philanthropy and political giving.

  • Nonprofits everywhere will examine their privacy practices to abide by the General Data Protection Regulation (GDPR).

Bernholz’s 2019 Blueprint certainly provides a deep dive into some big ideas and she encourages the conversation to continue by using the Blueprint’s included discussion guide with your colleagues.

Want more?

Download Lucy Bernholz’s Philanthropy and Digital Civil Society: Blueprint 2019.

Check out the resources from the Digital Civil Society Lab.






Impact Investing at Work in MI

The Saginaw Covenant Academy is now in its second month of operation thanks to an impact investment by the Saginaw Community Foundation.

The academy is one of three locations in Michigan that provides educational opportunities to youth who are experiencing homelessness, considered at-risk, who have dropped out of school and those who have been incarcerated.

The community foundation provided a $400,000 loan, to be paid back over four years, which helped transform a former funeral home into the new educational institution, which serves students ages 16-22.

The project surfaced as a need from the community and aligned with a key focus area of the community foundation.

“Our board of directors, through some generative governance discussions, has really been talking about how we can truly address the cycle of poverty we have in our community. We have been looking at this through an educational angle,” Renee Johnston, president and CEO, Saginaw Community Foundation and chair, CMF’s Impact Investing Committee said.

Johnston said there was immediate interest from youth in the community in utilizing the academy’s services.

WSGW Radio reports that Saginaw Covenant Academy is already serving 25 students who were facing barriers to completing their education.

“The more we can get to young people in our community who have fallen through the cracks and lift them up so that they can be successful and active people in our community, that’s one step toward breaking that cycle [of poverty],” Johnston said.

Johnston said they have received positive feedback indicating that this project is truly addressing a need in the community.

“I think philanthropy has more opportunities like this across our state and we just need to jump on those opportunities. In some cases, it will mean taking risks, but we can weigh those risks, and as philanthropic leaders we don’t have to do this alone,” Johnston said. “We can really look to each other and I think that’s also the purpose of CMF’s Impact Investing Committee – to continue to lay the groundwork, the knowledge and the awareness of how this vehicle can truly be very powerful.”

Johnston and the Impact Investing Committee will meet in the new year to shape their plan of work for 2019.

Over the summer, CMF gathered feedback from members through an impact investing online survey to better understand perceived barriers, specific issues of interest and successes in impact investing.

Moving forward, the data will help CMF better assist members who want to learn more about what their colleagues in the field are doing, have done and hope to do in impact investing. It is also informing our learning opportunities, demand for the impact investing expert-in-residence program and the development of new resources. As needs in communities continue to grow, the norms of philanthropy are tested and types of philanthropy are diversified to innovate and put more of philanthropy’s assets to work solving these problems.  

“Impact investing is not really a new practice; we know that it has been going on for decades in communities across the country as boards of directors considered capital needs in their communities and exercised business practices utilizing the foundation’s assets to meet nonprofit sector capital needs,” Debbie McKeon, executive vice president and COO of CMF said. “Defining these practices as impact investing has, in many cases caused concern, though it was really aggregating the learnings of an existing body of work to accelerate shared learnings, its use when appropriate, and facilitate continued innovation on the uses of philanthropy’s capital to grow mission impact.”

“We are also participating in the national conversation about how to facilitate deal flow, from ensuring that potential investees are investment ready to help investors identify deals, to efforts that can reduce transaction costs,” Jennifer Oertel, CMF’s impact investing expert in residence said. “Toward that end, at CMF, we are going to be more proactive in convening not just our members but all of Michigan’s stakeholders in order to facilitate communication and resource sharing amongst those groups.”

Oertel said she is seeing a growing interest in the practice of impact investing from CMF members, including conversations around Opportunity Zones legislation and investments in the Michigan Collaborative, a publicly traded mutual fund available to CMF members, managed by Community Capital Management.

Want more?

View CMF’s collection of resources and information on impact investing.

Check out our Opportunity Zones resources.

Learn more about the Michigan Collaborative.








Learning Services Calendar: Plan your 2019 networking and learning opportunities with us!

Are you looking for ways to connect, collaborate and learn with your colleagues in the CMF community of philanthropists?

CMF has released our 2019 Learning Services Calendar which highlights our lineup of webinars and in-person learning events, affinity group and learning community meetings and collaborative opportunities.

CMF’s 2019 webinars and in-person events tap into the sector’s latest knowledge, resources and emerging practices to keep you at the cutting edge of the field. In 2019 we will explore:

  • Best practices for your work relevant to your constituent group and to grantmakers more broadly.

  • Practices and trends such as impact investing, collaborative funding and more.

  • Education and engagement around issue areas such as: education, aging, Census 2020, affordable housing, mental health, the opioid epidemic, the state of our Great Lakes and much more.

  • Diversity, equity and inclusion (DEI) is embedded in our leadership and culture programming throughout learning opportunities such as the mentoring program, intercultural tools for foundations, issue area work and events aligned with the Truth, Racial Healing & Transformation (TRHT) efforts underway in Michigan.  

In addition to events already scheduled, we will be adding convenings throughout the year to ensure you have the real-time content needed in this dynamic environment.

The calendar also includes several special events, such as the CMF President’s Listening Tour in January and February, and CMF’s 47th Annual Conference, taking place October 6-8, 2019 in Traverse City.

Download the 2019 Learning Services Calendar.

Register for our upcoming events.

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