Where Do We Go From Here?

2020 has not been the type of year any of us hoped for or could have predicted. The COVID-19 pandemic has changed our world. Here in America, politics have left many of us butting heads with our neighbors. The result has been a mixture of emotions, ranging from exasperation to frustration to anger.

But change is approaching rapidly. Vaccines will be available soon (though sooner for some than for others). And unless some drastic and unforeseen event changes the political landscape, Joe Biden will become president of the United States on January 20, 2021.

A lot of what Biden will be able to accomplish during his tenure will depend on the results of the runoff races for senator in Georgia. The Chronicle of Philanthropy recently took a look at the cautious optimism provided by a Biden presidency, an optimism tempered by the ability to legislate in a divided Congress. While organizations with missions relating to climate change, racial and social justice, the environment, healthcare, and other issues may welcome the Biden administration, it remains to be seen how much actual legislation will end up shifting from the current administration to the next.

But even without knowledge of which way the Senate will turn, we can still take a preliminary look at how Biden's presidency might affect the nonprofit world.

Potential positives of a Biden presidency

In the U.S., some nonprofit observers are hoping for the establishment of an entity similar to the Small Business Administration but that focuses on nonprofit organizations and concerns. The sector employs 12 million people, which makes some people wonder why there isn't a government entity available to address or advocate for the sector's needs. The Biden administration has a chance to listen to the sector and work towards real progress for both donors and organizations.

The Biden transition team has tapped many nonprofit leaders to assist with the transition. Hopefully, this work in the transition foretells a willingness to continue to work with the nonprofit sector throughout Biden's term.

We've previously discussed the so-called "Mexico City Policy," otherwise known as the "global gag rule." This policy withholds U.S. government funding from foreign organizations that provide abortion, expand abortion services, or advocate to decriminalize abortion. The policy has been enacted by Republican administrations and rescinded by Democratic administrations ever since it was put in place by Ronald Reagan. The policy's rescission will surely be one of the earliest of Biden's executive orders. This move will make U.S. federal funding available to many organizations that were disqualified under the Trump administration.

Lastly, Donald Trump's election in 2016 and ascension to president in 2017 led to what many people in the sector termed the "Trump bump." Small donors opposing Trump's policies opened their wallets and donated to charities they felt needed help more than ever. This donation activity also goes hand in hand with a concept known as "rage donating," where people who feel otherwise powerless to create change also bust out the donation dollars.

In an article for The Chronicle of Philanthropy, Michael Conklin, a professor of business law at Angelo State University in Texas, theorized that the contentious nature of the current political climate may lead to continuing strong donating trends. "It's possible that liberals got the best of both worlds. They got the win, but they didn't win in a manner that was as one-sided as expected." He said that progressives are "not being complacent, which is a good thing for contributions."

Right-leaning organizations may also see a "Biden bump" similar to the earlier "Trump bump" as the failure of their candidate to win a second term leads to the energization of some donors. Peter Lipsett, Vice President at DonorsTrust, a fund sponsor whose supporters focus on advancing conservative policies, points out that Republican wins in down-ballot races will also excite donors.

Potential negatives of a Biden presidency

Perhaps the largest concern about the Biden administration from a philanthropy standpoint will be how any changes to the current tax plan will influence major donors. (Of course, any tax plan changes will depend on how the final Senate races turn out.) Biden has stated a desire to increase taxes on individuals earning over $400,000 a year. Another part of his proposed tax plan seeks to cut the percentage of each donation that wealthy people could deduct on their taxes. Legislation that reduces the tax benefit of charitable donations may lead to decreased charitable giving from these individuals. Organizations that rely on large donations from individual donors would be the most affected.

However, the overall state of the economy may have a larger impact on giving than any tax plan. Peter Lipsett at DonorsTrust said, "That’s generally a better driver of what philanthropy's going to look like than the changing winds of politics." We are still in the grips of the pandemic, and as we move through the holiday season, the number of cases and deaths will reach numbers we haven't seen yet. The effect of these accelerating casualties on the economy and on the behavior of the populace is still somewhat of an unknown, and will depend greatly on whether or not additional stimulus packages make it out of Congress and how comprehensive those packages are. The unemployment rate is still high (11.1 million unemployed and a rate of 6.9%, as of October), which decreases the number of potential donors and spare dollars to go around.

Part of Biden's effect on the nonprofit sector will depend on where he falls on the political spectrum. If he hews further left, there is the potential to invigorate progressive groups while also rousing conservative groups in response. If he walks a centrist line, nonprofits may have a more difficult time motivating donors and volunteers.

This past year has been unprecedented. The coming year will present its own difficulties and challenges, as well, but it also presents hope and change. Hopefully, the Biden administration can help create a climate that is mostly useful and beneficial for nonprofit organizations and the sector, while not alienating potential donors. There is still a winding and treacherous path ahead of us, but with solidarity and a bit of luck, progress will be made.