In 2018, people in the United States donated an incredible $428 billion to charity. The U.S. is the most charitable nation on earth. Unfortunately, this might not be the case for long. And 2020 could be the turning point thanks to two concerning trends within philanthropy and policy that could curb the amount and effectiveness of charitable giving.
The first threat to philanthropy is forced donor disclosure. As many as 28 states are expected to consider laws next year that would require nonprofit organizations to share a list of their donors with the government. This effort is one way policymakers seek to control the charitable sector.
The ability to give anonymously has been around since our country’s founding. Americans choose to give anonymously for a variety of reasons. Some do not want to be solicited again by the same recipient or from others. For many Christians, Mormons, Jews, and other devout donors, religious beliefs require that they give anonymously. Some donors simply derive pleasure from giving and not being thanked. Others fear physical harm to themselves or their families. In addition, some anonymous donors fear harassment, retaliation, or boycotts from others who disagree with the causes they support. All of these donors have a right to privacy.
Throughout our history, anonymous giving has funded social campaigns that have changed society. Women’s suffrage, the civil rights movement, and gay and transgender rights are examples of causes that were once unpopular that donors chose to support because they could do so without the fear of reprisal. In 1958, the Supreme Court recognized and affirmed this right in NAACP v. Alabama.
Sadly, history is lost on policymakers. Misguided proposals for greater donor disclosure will not lead to better outcomes but may discourage the private giving that nonprofit groups depend on.
The second threat to philanthropy is forced diversity, equity, and inclusion. Activists have been advocating for philanthropic organizations to meet certain quotas and implement dedicated programming around race, gender, or sexuality. Whether this is forced (as was proposed in California in 2008 and has been discussed in other states since) or voluntary (as some organizations have taken on in recent years), we should proceed with great caution.
Mandated board quotas have become a go-to solution to correct what some consider gender imbalances in corporate leadership. However, Europe’s experiments with mandates send us a cautionary tale. Sixteen years ago, Norway mandated that public companies reserve 40% of their board directors for women or risk dissolution. Joined by Iceland, Spain, and France, which set similar quotas, these countries assumed that if more women were making company-wide decisions, it would lead to better-performing companies and help younger female workers advance.
However, researchers found no direct causal relationship between corporate performance and boards with more women: no change in decision-making, no effect on the number of women in senior leadership, and most importantly, women in lower positions did not climb the ladder any faster than before. Furthermore, diversity, equity, and inclusion efforts often pull organizations away from their philanthropic missions.
Throughout history, private charity has been immensely effective by delivering life-saving and society-enriching impacts from medical-breakthroughs curing diseases to the democratization of education to the preservation of our awe-inspiring natural resources and attractions. As policymakers and advocates think about legislative efforts to control and direct both donors and the philanthropies that invest in our communities, they should think carefully about the unintended consequences of their efforts. Our laws should support and celebrate our American culture of giving freely and generously.
Patrice Onwuka is a Senior Fellow with the Alliance for Charitable Excellence, which seeks to protect, defend, and promote philanthropic excellence so donors can invest in causes that strengthen our communities, states, and country.
