Fiscal Cliff May Dampen Traditional Charitable Giving But Impact Investing Will Grow In 2013

Thursday, December 27, 2012 08:21
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Fiscal Cliff May Dampen Traditional Charitable Giving But Impact Investing Will Grow In 2013

Tags: charitable giving | Economic Outlook | economy

Because the fiscal cliff negotiations may limit charitable deductions in 2013, not all charities can look forward to robust contributions over the next year.

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But impact investing is expected to gain even greater traction and the global culture of giving will continue to spread.
 
Many of the wealthy are increasing their charitable amounts to lock in a deduction at the current level.
 
US donors usually give about $300 billion per year and most of those are small and from individuals whose ability to be generous is directly related to their jobs and income levels.
 
The top 20% of wage earners feel that the worst of the recession is behind them so that area for giving in 2013 will be strong in 2013.
 
Local, small organizations that depend on the small donors will fare worse. Some of the smaller, local charities will not receive donations—particularly those that were hit by Hurricane Sandy.
 
Some of those charities received larger donations in 2012 because of the hurricane. They feel that donors reached into their 2013 budgets to make those additional contributions.
 
Impact investing will be the exception since it is expected to gain even more traction in 2013.
 
Impact investing is any investment made that targets social and environmental benefits as well as a market return.
 
People are becoming more sophisticated in their charitable giving and impact investing is supporting global development.
 
It’s a three pronged focus. Some of the capital is focused on philanthropy, some on investment return, and some from the public sector.
 
Donor collaboratives are also becoming more popular where investors pool funds around causes of mutual interest.
 
Impact investing is spurring more of a systemic approach to philanthropy. It’s objective is to solve a problem and yield investors clear and consistent outcomes.

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