Wealthy philanthropists play a crucial role in providing monetary resources to various non-profit institutions. Without such donations, many non-profit organizations would cease to exist. In recent years, however, wealthy donors have begun to reconsider how they donate money. The rethinking of charitable giving is occurring because of proposed tax reforms and impact investing strategies.
Tax Reforms
Lawmakers are considering changes to charitable deduction rates for federal income taxes. At the current time, taxpayers are allowed to deduct 50% of adjusted gross income when making donations to qualifying organizations. However, in some instances, this deduction is limited to 20% to 30%. Wealthy donors use such deductions to relieve their tax burden, while also providing resources to important causes.
Proponents of tax reform want donations for charitable giving to be based on a specific scale. This scale would give higher deductions to taxpayers who contribute to the charities with the greatest needs. Handling deductions in this manner will lead to organizations with the most significant need for monetary donations receiving the proper amount of resources. Additionally, donors will receive a considerable deduction at tax time.
Tax reform could have a definite role in transforming the way people give in the future. The ability to claim higher deductions based on the need of the charity could prove to be beneficial to many organizations in the long run. The result of such reforms could significantly improve the quality of life for the people that charitable organizations serve.
Impact Investing
According to the Global Impact Investing Network (GIIN), impact investing involves donating money to a better society and environment. Impact investment usually encompasses the promotion of social issues such as affordable housing, microfinance, healthcare, and education. This type of investment also includes addressing environmental issues such as conservation, renewable energy, and agriculture that is sustainable.
Today’s wealthy investors want to ensure that the organizations they help are carrying out their stated missions. Donors want to know that charities will enact programs and policies that contribute to change society and the environment in positive ways. Giving without purpose is no longer attractive to wealthy donors. Impact investors are inclusive of individual and organization donors, including fund managers, churches, and private foundations.