Philanthropic giving is changing and will rely more on wealthy individuals or corporate giving as donations will decrease with a shrinking middle class.
That's according to a nationally recognized philanthropy scholar who spoke Friday in Terre Haute to members of the first meeting of the Wabash Valley Philanthropy Alliance.
Laurie Paarlberg is a professor of philanthropic studies and the Charles Stewart Mott Foundation Chair on Community Foundations at the Indiana University Lilly Family School of Philanthropy at Indiana University-Purdue University in Indianapolis.
She said changes in technology, economics and political partisanship are impacting non-profits and philanthropy, and individual giving is being impacted from changes in tax deductions.
"We think the higher bar for itemizing tax deductions will depress individual giving by people particularly in the middle class. It will have less effect on the very wealthy," Paarlberg said.
"At the same time, economically we are growing income inequality. When we put these two together, there are concerns that giving by middle income donors is going to contract while giving by the very wealthy is going to expand.
"That is really important for community philanthropy because for most local nonprofit organizations that are doing work in the community, they are relying on middle class donors," Paarlberg said.
"This possible combination of forces could have important effect on local giving."
The wealth gap is becoming a giving gap, Paarlberg said. Nationally, giving by individuals decreased as a percentage of total giving in 2018 to 68 percent, a drop from 70 percent in 2017.
The percent of households making charitable gifts has declined while the share of giving by households earning more than $1 million has tripled in 25 years.
Also, volunteering has declined steadily across the nation, with the steepest declines in rural areas.
Additionally, over the past 40 years, with technology and increased geographic mobility "we have a changing sense of what is community," Paarlberg said. A community used to be where someone lives, Paarlberg said.
"But individuals are mobile and increasing technology allows me to donate as easily in Indianapolis as I could in Africa."
The sense of community "is changing and we increasingly see individuals identify with a community of identity, a religious community, a community of race or gender or special interest. These notions are challenging individuals' contributions to a community of place and being philanthropists in their community of place, particularly middle income donors," Paarlberg said.
Additionally, nationwide there is a decrease in local government expenditures for social and human needs, she said.
There "is a decreased capacity of local government to sometimes forge solutions to local issues because of increasing partisanship and the difficulty of creating and enacting policy," Paarlberg said.
United Ways nationally are seeing an erosion of workplace giving and have seen a decline in revenue after moving away from a membership model, Paarlberg said.
One way to strengthen philanthropy is through collective efforts such as alliances, Paarlberg said, but those could face the challenge of groups acting competitively instead of collectively.
Beth Tevlin, executive director of the Community Foundation of the Wabash Valley, said the newly formed Wabash Valley Philanthropy Alliance is comprised of the Community Foundation of the Wabash Valley, Indiana State University, Rose-Hulman Institute of Technology, St. Mary-of-the-Woods College, Ivy Tech Community College Foundation, United Way of the Wabash Valley, Union Hospital Foundation, Vigo County Education Foundation and the Hamilton Center Foundation.
"Philanthropy is so broad in this community," Tevlin said, with many institutions having professional organizations that raise money. Plus, there are small groups.
The alliance focuses on "how can we utilize the local expertise ... to help raise the entire area," Tevlin said. "Philanthropy touches every part of our life, especially in Vigo County, but throughout the Wabash Valley. It is a very important economic driver in Vigo County."
" ... Our goal is to see what we can do to help build some camaraderie and expertise," Tevlin said. "Philanthropy is really one of those items where the rising tide does raise all ships," Tevlin said.
Philanthropy, Paarlberg said, "remains one of the few places to have non-partisan discussion and come together to address local issues."