2019 Year in Review

January 21, 2020

January is a time to look back and look ahead. Last year at this time, I called out some key issues to watch in 2019. Here’s a reminder of what I said and where we are now, one year later.

2019: The 2017 Tax Cuts and Jobs Act is likely to affect charitable giving. Among other changes, about 25% of middle-income taxpayers will lose the ability to itemize and deduct their charitable giving on their income taxes. Since nonprofits receive up to 40% of their donations in December, we don’t yet know how big the impact will be. In addition to watching how overall giving is affected, we are watching the overall number of donors, trends related to average donations, and what types of nonprofits are winners and losers since people at different income levels prioritize different causes.

2020: The sky didn’t fall. Phew! The jury is still out on the long-range effects of the tax law changes, and they probably aren’t great, but grave predictions of a big drop in giving have not happened yet. There is a great deal of nuance here, so we’ll continue to watch and learn. We did have a win in December on one issue related to the 2017 Tax Cuts and Jobs Act. The Act called for a new tax on transportation benefits for nonprofit employees (such as providing transit passes to employees as a benefit). In December, Congress overturned this provision and eliminated the tax.

2019: Labor costs are rising in Washington state due to the increasing minimum wage, new paid sick leave requirements, and rising health insurance costs. Next year, we’ll adjust to the new paid parental leave program and an additional rise in the minimum wage. And still in process is a proposed increase in the minimum threshold for overtime exempt staff. Unfortunately, these increases have generally not been matched by increases in government and foundation funding, putting a squeeze on many nonprofit service providers.

2020: Labor costs have risen, and more change is coming. In addition to the issues mentioned last year, Labor & Industries did adopt new rules that will slowly raise the Washington state overtime threshold to 2.5 times the minimum wage. This means by 2028, all staff making less than the threshold amount (estimated to be $83,356) are eligible for overtime, regardless of the nature of their duties. 2020 also marks the implementation of the state’s new Parental and Medical Leave program, which will be another big adjustment for nonprofit employers. Washington Nonprofits will help you adapt to these changes with a two-part webinar.

2019: Philanthropy is changing, in positive and negative ways. Wealth is shifting into the hands of fewer and fewer individuals, giving them disproportionate say in what is worthy of funding. More philanthropy is coming from business and tech leaders who expect more data about impact, placing new and different demands on nonprofits. Our economic activity is dominated by large, global corporations who are not involved in local community affairs and typically do not fund local, grassroots projects.

2020: These trends are all still in play. There is more push back than ever in the nonprofit sector regarding funder restrictions and ways of doing business. In 2020, we will advocate to change how government contracting happens. We expect that the sector will continue to pressure foundations to be more equitable, transparent, and accountable.

2019: Racial equity is a big deal. The evidence that racial disparities are present in health, education, housing and most every aspect of our lives is ever more well-documented and visible to us all. Nonprofits need to look carefully at their own practices to ensure that they are not blocking leadership diversity or perpetuating disparate treatment of people based on race.

2020: Still true.

2019: The economic outlook is shaky. Many analysts are predicting a recession by 2020. Already, the lack of affordable housing statewide and growth in homelessness is very visible to the nonprofit community. If we do experience a recession, human service providers are likely to face rising demand coupled with decreasing revenue. Budget cuts coming down from the federal level could create a perfect storm.

2020: Thankfully, the economy is still doing well. Economists still predict a recession in our future, but the timeline is much murkier.

2019: Nonprofits give me hope. Nonprofits are valuable, resilient, fueled by passionate and thoughtful people.

2020: Nonprofits still inspire me. In addition to the reasons I gave last year, I am delighted to see that nonprofit leaders are more invested in figuring out how we can disrupt “business as usual” and evolve our organizations into something more sustainable, equitable, and powerful as a force for good. Together, we can imagine a new way to draw a fish.

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