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 116^th 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. 

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