As we approach the beginning of a new year, I want to offer my predictions for what the next twelve months will bring in the realm of nonprofit finances. Actually, what I have in mind is an assessment of trends I believe may be on the horizon, though many may take more than twelve months to materialize and I admittedly have substantial uncertainty about whether they will materialize at all (note: I’m already providing excuses as to why they were poor predictions). As an accountant, I’m perhaps better suited to summarize the past year than make predictions about what’s to come, but that’s less fun so here it goes…
- There will be more discussion and debate about changes to the tax deduction for charitable contributions. Since most such discussions will be on controversial proposals such as capping or otherwise limiting the entire deduction (rather than seeking less divisive and more targeted changes in loopholes like that for donations of appreciated property), the deduction will, once again, survive.
- Both program lending and direct cash transfers by nonprofits have taken center stage in the international aid realm of the past few years. Expect this trend to take hold in domestic charitable endeavors, as charities seek to find new ways to meet needs in the US (I, for one, am partial to the idea that charities should provide check cashing and payday lending).
- With more states’ attorneys general reporting on and expressing frustration with professional fundraisers and their take from donations they solicit (as well as the excellent reporting by CIR and Tampa Bay Times in their Worst Charities in America series), there will be added pressure for regulatory efforts to curb telemarketing abuses. Though more elaborate legislative and legal solutions will be proposed, perhaps the response with the most potential to be implemented (and one the nonprofit community would be wise to consider supporting) is the revision or removal of the nonprofit exemption to the national do-not-call registry.
- The increased popularity of Donor Advised Funds and Program Related Investments will force the government to provide additional guidance and/or stricter rules for private foundations in terms of what constitutes a distribution for the purposes of the 5% minimum payout requirement.
- Legal challenges by American Atheists, the Freedom from Religion Foundation, and others will eventually lead to more nonprofits being required to file 990s.
There you have it: what I think is on the horizon. I welcome your thoughts about these and/or other trends that may be in store for us in 2014. I will return here next year to provide a series excuses as to why my predictions were way off!