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Corporate Bonuses Replaced by Corporate Charitable Giving at End of 2017

Jeannie Fox and Ruth McCambridge
January 2, 2018
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By SteveStrummer (Own work) [Public domain or Public domain], via Wikimedia Commons

December 29, 2017; CBS News, “Moneyworks”

A fascinating report from CBS News’ “Moneyworks” covers a study from Accounting Principals which found that only 63 percent of companies said they planned to give year-end bonuses, down from 75 percent the year before. But the more interesting finding is that 38 percent of those not giving bonuses said they would be giving to charity instead. That’s some increase from 2015 and 2016, when the percentages were five and seven percent, respectively.

“It’s a pretty drastic increase,” said Jeramy Kaiman, vice president at Accounting Principals. “The financial incentive to give out more bonuses by the end of this year is for the corporation to have more business deductions in 2017 while the tax rate is high,” said Mildred Carter, a senior federal tax analyst at Wolters Kluwer Tax & Accounting.

And, as another market analyst reflecting on the numbers of natural disasters suggests, it also gives a quick boost in a more values-conscious market—a twofer of sorts.

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Free Report: What Can We Learn From the  Giving Patterns of Donor-Advised Funds?
To be clear, the benefits follow to the entity seen as making the donation. If a company grants the income to employees and then lets them make their own donations directly, those employees will receive the tax benefit. But what may be happening here is that the company makes the donation and therefore receives the tax benefit. Individual employees are left out of both the income and the act of charitable giving. Thus, nonprofits may not want to get too excited by a 2017 increase in corporate charitable dollars.

This year, though, charities may not split hairs when receiving higher donations from corporations; they’re just happy to see more year-end donations, since the impacts of the new tax bill on 2018 giving are unclear at best and feared to be disastrous for promoting giving at worst, with “an estimated loss of giving between $12 and $20 billion in 2018.” What is clear is that NPQ will continue to monitor the effects of this bill both on charities and individual giving behavior.—Jeannie Fox and Ruth McCambridge

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About the authors
Jeannie Fox

Jeannie Fox is on the faculty of Hamline University and directs the master's of nonprofit management program. She has over 20 years experience in nonprofit organizations and public agencies. She most recently served as chief of staff to former Minnesota Secretary of State, Mark Ritchie. Following a career as a senior manager in nonprofit direct service organizations, Fox lobbied on behalf of the nonprofit sector at all levels of government during a nine-year tenure as the deputy public policy director for the Minnesota Council of Nonprofits. She previously held adjunct faculty positions at the University of Minnesota Twin Cities and Duluth campuses and was a 2012 State Department Legislative Fellow in the Dominican Republic. Fox’s publications include chapters in the textbooks, “Nonprofit Management 101” and “The Lobbying and Advocacy Handbook for Nonprofit Organizations.”

Ruth McCambridge

Ruth is Editor Emerita of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at the Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.

More about: financial intermediarycorporate philanthropyNonprofit NewsPhilanthropy

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