Giving with Impact:
Transcript of the podcast:
MICHAEL: Welcome to season three of Giving With Impact, an original podcast series from Stanford Social Innovation Review, developed with the support of Schwab Charitable. I'm your host, Michael Gordon Voss, publisher of SSIR. In this series, we strive to create a collaborative space for leading voices from across the philanthropic ecosystem, to engage in both practical and aspirational conversations around relevant topics at the heart of achieving more effective philanthropy.
If there's one thing that the events of the past year have helped to remind us, it's the simple fact of how interconnected our world truly is. Issues like public health or the environment are, obviously, global in nature, and new solutions to global challenges are being innovated all around the world. But when you're a donor here in the United States who may be looking to support causes or organizations in other countries, how do you get started? And how do you make sure that you're maximizing the impact and effectiveness of the support that you're providing? Many of us may sincerely want to be the change we wish to see in the world, as Mahatma Gandhi famously said, but how do we do that? To help us better understand what donors need to be aware of when starting this global giving journey or as they continue to refine their support for international work, we're joined today by two individuals whose organizations are both working to provide answers and direction.
Kelsey McCarthy is Director of Private Donor Services at the Charities Aid Foundation of America. Kelsey began her tenure at CAF America in 2016, working with charity partners and individual donors. Now leading the Private Donor Services team, she manages a team of fund managers and provides support to CAF America's donor clients for their cross-border grant-making. Her background in grants management, fundraising, community outreach, and public health initiatives have helped Kelsey in her work at CAF America. Kelsey is certified in anti-money laundering by the Society of Tax and Estate Professionals and is in the process of pursuing a Chartered Advisor in Philanthropy Designation.
Our other guest is Fred Kaynor, Vice President of Business Development and Marketing at Schwab Charitable. A past guest of the series, Fred is responsible for engaging and building relationships with donors, financial advisors, and charities, in order to help increase the impact and efficiency of giving in the United States. He's also led an innovative marketing, communications, and partnership strategy that has established Schwab Charitable as a leader in the nonprofit sector. Fred brings over 20 years of financial services experience to today's discussion. In addition to his role at Schwab Charitable, he's formerly held senior level positions with MasterCard Worldwide and Visa.
Kelsey, Fred, thank you both for joining me today, as we explore some of the issues donors should consider as they seek to support nonprofits outside of the United States and how they go about doing so. Let's get started.
Kelsey, let me start with you. International philanthropy can be complicated. How does CAF America work to empower donors to support the causes they care about?
KELSEY McCARTHY: Michael, thank you for having me on the podcast today alongside Schwab Charitable. It's exciting for me, since I work very closely with Schwab Charitable on their international grants. As a global donor-advised fund that specializes in cross-border grant-making, CAF America works to ensure compliance with domestic and international regulations. We work with various types of donors, including corporations, foundations, and individuals to streamline the grant-making process, to minimize risk and the administrative burden.
Making a charitable cross-border grant can be complex, but that is our area of expertise. As an intermediary, we take care of the due diligence, regulatory compliance, and grantee reporting. Another way we can support our donors is through identifying nonprofits worldwide that align with their philanthropic mission.
MICHAEL: Thanks, Kelsey. Looking at the other side of the coin, as it were, can you share a little bit about how CAF America supports nonprofits?
KELSEY: Certainly, we work closely with our charity partners to help them understand the process in their own countries for how to receive foreign funding. Often, they are not familiar with receiving foreign grants and must do research and potentially complete several steps to be compliant with local laws to receive a foreign grant.
CAF America proactively conducts outreach to our grantee partners to alert them about changes in local regulations. We provide educational materials and resources to ensure they're in compliance to receive foreign funding.
For example, in India, organizations must be compliant with Foreign Contribution Regulation Act, FCRA, in order to receive foreign charitable funding. In the middle of the pandemic, in September 2020, India amended FCRA and the changes to the law went into effect very quickly. This has been a big topic of conversation, especially because it creates disruption in the flow of charitable funds to India with the current surge in COVID cases in the country. Just last week, India announced an update to the new FCRA rules, and Indian organizations have been given an extended timeline to comply with the new rules. This is tremendously helpful to get needed funding to organizations as soon as possible.
We reached out to our grantee partners in India about the new FCRA regulations, and we also worked with them to collect updated information that needed to change due to the new regulations. We are working closely with our grantee partners so they are aware of the changing regulations and are taking the needed steps to be in compliance.
MICHAEL: Kelsey, I can imagine how challenging it must be to stay on top of all of those different regulations for all the parts of the world in which CAF America has grantee organizations for their donors. We'll come back to that, I'm sure, in a second, but, first, Fred, let me turn to you for a moment. Not everyone may realize that it's possible to fund causes outside the US using their donor-advised fund. Could you give us an overview of how Schwab Charitable's solution can support international causes, and tell us how the work of CAF America fits into that matrix of giving?
FRED KAYNOR: Sure, Michael, and thank you. It's a pleasure to be with you. It's a pleasure to be with you, as well, Kelsey. Thanks for the opportunity this morning.
So Schwab Charitable is one of the largest national donor-advised fund providers in the country, and we recognize that more and more individuals and families have charitable goals that are global in scope, not just local to their community or domestic. So we recognize that, more and more, the ability to give with maximum efficiency, both to domestic, as well as global causes, is becoming an increased priority for everybody, particularly on the heels of the past year and the impact that we've all seen from the pandemic. So we have a number of different options for our donors to give on an international basis.
The first would be that donors could give to recognized 501(c)(3) charities that are US-based doing international work in the communities that they would like to serve outside of the United States by recommending grants to international causes through established charities here in the US and designating their gifts specifically for work that's taking place overseas.
FRED: The second option is for donors to give through intermediaries that facilitate direct grants to international charities, and that's where CAF America comes in. CAF America is a really extraordinary organization that helps to facilitate direct grants to international charities on behalf of donors that choose to do so. Donors can choose to recommend a grant through Schwab Charitable's network of vetted international charities, including CAF America, that are local to their particular areas of expertise, and can perform a review of selected charitable organizations and projects.
And then the third option, Michael, is for donors to give directly to qualified foreign charities by recommending grants through the Schwab Charitable Direct Global Giving program. And that is a detailed process by which Schwab Charitable undertakes to identify, vet, and, ultimately, approve an organization outside the US for receiving a grant from a charitable account at Schwab Charitable, and we can provide as much detail as you would need for that particular option through our website.
So no matter how our donors choose to support global causes and international charities, our specialist who focuses on international granting will help to guide you and make sure that whatever your charitable goals are on a global basis, that we do whatever we can to leverage all of these options.
MICHAEL: And, Fred, I think that's a great point to emphasize, that it's about the donor's charitable goals. So thank you for outlining those different options for us.
Kelsey, let me turn back to you now. I think we'd all agree that the past 15 months have been challenging for everyone. What, if anything, have you noted during that time with regard to donor support for international nonprofits, especially those on the front lines in the pandemic?
KELSEY: Overall, we've seen how donors have consistently demonstrated their willingness to accommodate grantee needs during the pandemic.
One of the initiatives we've undertaken dating back to March 2020, is a series of surveys to track the status, perspective, and needs of nonprofits worldwide, to inform donors. In the process, we've captured responses from over 3,500 respondents. As a part of this work, we surveyed corporate donors in July 2020, and we were reassured by what we found. There are three key insights I would like to share.
One is the giving over the past 15 months represents an expansion in funding, rather than a shift to COVID relief. By that, I mean donors continue supporting existing grantees working in other issue areas, but have now either expanded giving into or increased their giving to disaster relief.
Two, 90% of corporate respondents, many of which are Fortune 500 companies, have demonstrated flexibility to grantees' needs. So this flexibility has been seen in many ways, including a change in grant purpose, which allows grantees and organizations to direct funds to their most immediate needs or adjust the scope of the grant-funded project. This flexibility can also be seen in project timeline extensions to reduce the pressure and burden on the grantee, and also funding operational expenses or needs-based funding.
And the third insight I'll share is some additional really good news. Two-thirds of corporate respondents anticipated that their giving in 2021 would either remain at elevated levels or grow in the next year. That is a really important insight we learned from our donors.
And if listeners would like to read the full report series, it's available on our website at cafamerica.org. Furthermore, I will note that CAF America has facilitated over $100 million in global disaster relief, including COVID-19 relief. This is a CAF America record in global disaster relief giving, and it's indicative of broader giving trends. That $100 million in disaster relief represents grants recommended by corporate, foundation, and individual donors. We're seeing a large increase in disaster relief support from individual donors through our partners like Schwab Charitable, and these donors have been giving to not only COVID relief, but also other disasters, like the Australia bushfires, Beirut port explosion, among others.
MICHAEL: Kelsey, I think a lot of our listeners will be happy to hear that statistic about two-thirds of corporate donors plan to stay at the same level or give even more in 2021, because I know we've often wondered if, you know, there was going to be a reduction back to pre 2020 levels.
But I also want to lean into the point that you were making about the 100 million in disaster relief given. We know that other types of nonprofits around the world have been impacted, whether it's as a result of the economic downturn or other issues. What about those nonprofits that may not be on the disaster relief front lines? How are they being impacted?
KELSEY: Great question. So we've seen that donors have not shifted away from giving to their existing grantees working in other issue areas, but have simply expanded giving into disaster relief.
For example, I've worked with donors who are continuing to give to the arts, specifically, the performing arts, over the last 15 months. This is crucial for nonprofits during this challenging time, so they can keep their doors open and maintain their staff.
Another example is a donor who gives to nonprofits worldwide focusing on several issues, ranging from food security, food access, to sustainable agriculture. We saw that this donor not only supported organizations focused on food access, which was a growing need during the pandemic, but also continued supporting sustainable agriculture programs. This donor was not focused exclusively on short-term relief, but also continued to give to long-term strategic initiatives around sustainable agriculture and small holder farming.
MICHAEL: So I think that donors' support of long-term initiatives is a great point to go alongside what you had said earlier about the flexibility and the additional support going to disaster relief beyond a lot of the funding that donors have already been giving, especially in areas, you know, whether that's food access or the arts, or things that aren't directly related to the COVID disaster or others that took place.
Fred, let me come back to you for a second. You know, over the course of the last couple of seasons, we've made sure to note that there are certain advantages that donors can benefit from, and then charities and nonprofits can benefit from when they have a more strategic approach to their giving. For those donors who live in the US, but want to support causes in other countries, are there similar tax-advantaged giving strategies that US residents can take advantage of to maximize their charitable dollars abroad?
FRED: It's a great question, Michael, and the answer is there are. We would encourage donors to take advantage of the current tax-friendly environment for charitable giving at home as a way to significantly augment the impact of the charitable dollars that they designate for use both at charities here domestically and those abroad. And I just want to echo what Kelsey had said, we have seen the use of our donor-advised fund spike exponentially during the period of COVID because we believe it provides individuals and families with such a significantly more efficient way to give with maximum impact because of the tax advantages and because of the ease of use. We've also seen a similar trend to Kelsey, which suggests that this spike in giving is an incremental spike. There's a continued level of generosity and support for organizations that donors give on a sustained basis and choose to support as their favorite causes or charities. And yet we still saw a significant spike in giving to organizations that, as Kelsey points out, are on the frontline, and providing either relief and recovery support, or therapeutic research, or vaccine acceleration purposes around COVID. So it really was quite inspiring to see how donors were using our solution as a way to really achieve maximum impact both with the charities that they support on a routine basis and those that they wanted to support incrementally to provide support and relief for individuals and communities that were severely impacted by the pandemic.
As it relates to the tax environment, the annual income tax deduction limits for gifts to public charities, including donor-advised funds, are 30% of adjusted gross income for contributions of non-cash assets, that's stock or private business interest, real estate, and so forth; 60% of AGI for contributions of cash; and 50% of AGI for blended contributions of both cash and non-cash assets. So you can see that the tax environment remains quite favorable for individuals who want to give a variety of different types of resources for charitable purposes.
And then there's a third element, which is a continued tax incentive that was initiated in 2020 through the Coronavirus Aid Relief and Economic Security, or CARES Act, which is now extended through 2021. And one of those incentives is the option for individuals who take the standard deduction to claim an additional $300 for cash contributions and $600 for couples. Donors who itemize… and this is a very interesting development… donors who itemized deductions may elect a 100% AGI deduction for cash contributions that are made directly to public charities, and deduction amounts above this limit can actually be carried over for up to five years. So there's a variety of provisions that have been updated that really provide for an extraordinarily favorable tax environment for charitable giving purposes.
MICHAEL: And I'm just going to add, I think, something, Fred, that you and I have spoken about before is that, you know, while there are all these tax advantages, at the end of the day, most people give because they want to help, you know, that there is the tax advantage, but it really comes back to people wanting to make an impact.
FRED: That's right, Michael, and I think that that's a very important point. We find the donors that are really most active with their donor-advised funds are those that are using it for maximum efficiency to achieve maximum impact on the causes that are most meaningful to them. And it's not, you know, driven principally by the tax benefits. But the tax component is just one component of the broader solution that makes giving so easy and efficient for them.
MICHAEL: Kelsey, let me come back to another point. So, both you and Fred talked about the increase in giving, and, of course, we know there's also been an increase in need. What are you, or what is CAF America seeing as the areas of greatest need outside of the United States? Is it mostly related to ongoing efforts around COVID relief or are there other equally important areas that we need to keep in mind or that donors need to keep in mind similar to some of the ones that you mentioned earlier?
KELSEY: Yeah, so the pandemic revealed the interconnectedness of our diverse challenges and exposed vulnerabilities worldwide. So the pandemic had an impact on so many areas from health, food security, employment, to economic security. And what we learned from our surveys is in terms of issue area, apart from the spike in need for frontline services, the pandemic has, essentially heightened and amplified the existing needs.
So one example is the area of food access and food security. So we have learned food banks are seeing a doubling of demand for food relief across the globe, and we've seen giving to food relief increase fivefold from 2019 to 2020. We also learned from nonprofits who responded to our surveys that needs unrelated to COVID haven't gone away, and, in many cases, have grown during the pandemic. Interesting fact to share is, 71% of respondents and our most recent survey indicated they've added new services or programs to address emerging needs in their communities, 71%. And the agility of the nonprofits to pivot their programming and services during the last 15 months has been incredibly important, and it correlates with their ability to survive as an organization. So some of the stories shared with us were how nonprofits adjusted their programming to relief programming and developed new ways to support their communities. We learned that this is critical for their survival and also a crucial way to further support their communities in ways most needed during this challenging time.
MICHAEL: So that's a fascinating statistic, 71% have added new programs, and I think that really talks to the innovation and the creativity throughout the nonprofit sector. You know, it's great to hear that. We know, though, at the same time, that there've been nonprofits who in the past year had to shut their doors, and, you know, many of those may not come back after the pandemic has subsided here in the US or in other parts of the world. What should donors think about when looking ahead with regards to support for the longevity and resilience of the international nonprofits that they support?
KELSEY: Indeed. So, as we've seen in our surveys, at the beginning of the pandemic one in four nonprofits predicted that they were likely to close within a year if the situation didn't change, one in four. In our most recent survey, the number is relatively unchanged at 22%. The grit, tenacity, and determination of organizations worldwide is truly inspiring, and this figure suggests there is still instability.
But, now, looking ahead, what we like to call future-proofing nonprofits for resilience against the crisis to come is a subject of great interest, as many donors rethink their strategies for giving. We have asked nonprofits about areas where they need to strengthen their resilience, and they identified these four areas which can inform donors for their giving.
One, invest in the fundamental competencies of organizational management by providing funding and also skills-based support. These competencies include communications, technology, finance, and leadership. And in addition to funding nonprofits to strengthen competencies in these areas, donors should consider offering skills-based support.
Two, flexibility and funding. Greater openness to allow for operational expenses to be funded in addition to program funding is very important. Nonprofit respondents highlighted the need for flexible funding that can be directed to cover operational needs.
The third item: establish partnership and multi-year funding commitments. This really creates stability for organizations and forward planning for their programming.
And, four, support for monitoring and evaluation to reduce the burden donors may place on their grantees.
MICHAEL: I think that as you were mentioning those four areas, I just kept thinking those are four areas that we've been saying are important for donors and the organizations they support to implement all along. So it may be one of the positives, if anything that came out of the past year is that now more donors are coming along with this thinking.
Fred, same question to you, you know, what recommendations do you have for donors as they are thinking about their ongoing support for organizations either here in the US or abroad.
FRED: I would echo much of what Kelsey said. I would encourage donors to take a really thoughtful, strategic approach to identifying and pursuing their charitable giving goals, and then identifying the organizations that align with what those charitable giving goals and objectives are. If they already have nonprofits that they know of and want to support, I would encourage them to be… like Kelsey rightly points, out to be as flexible as possible with respect to how they designate their giving. It really should go un-designated, because now more than ever, regardless of whether these are frontline organizations that provide relief and recovery support for COVID or are organizations that they support as a part of their ongoing charitable plan, they're all very challenged and they are all highly resource constrained. So the less restrictions and the less designations on the charitable gifts that they provide, the easier it is for these organizations to use those funds where they're needed most to ensure that they're sustainable for the foreseeable future. So I would encourage donors to really take a thoughtful and very deliberate approach to how and where they give.
We've recently developed the Schwab Charitable Giving Guide, which provides fillable files and a variety of resources to our donors that enable them to really take that thoughtful approach, answer all the questions that they may have, and, ultimately, create a strategic plan for their giving. That might be a useful tool. I would encourage people to go to our website and take a look at the Schwab Charitable Giving Guide to see if it would be a benefit and value.
I would also suggest that… you know, you give as much as you can. Our donors… we are just so grateful and so inspired by the generosity of our donors. And this year, in particular, this past 14, 15 months, our donors have been extraordinarily generous, more than they ever had been before. They have demonstrated that they are ready to meet the challenge of giving as much as they possibly can, given the spike in need, both among those charities they support on a routine basis and those frontline providers that provide support for those that are most impacted by COVID. I would just encourage that they continue that trend, they continue to be mindful of the fact that the COVID pandemic has long-term impact on a variety of different communities, on a variety of different nonprofits, not just those providing relief services, but those that are, you know, providing support for other areas in the community. And the need has never been greater for maximum impact with charitable giving.
MICHAEL: Well, I think that generosity, that goal alignment, and that mindfulness that you described are actually a very positive note on which to end our conversation today.
Kelsey, Fred, I'd like to thank you, both, for your time today. I realize that the ways that donors can support organizations outside the United States are as varied as the number of organizations and issue areas, themselves. But hopefully, this discussion has helped some of our listeners to start thinking about their international philanthropy and what steps they can take to support the groups on the ground who are doing important work.
FRED: Michael and Kelsey, thank you very much for the opportunity to speak with you today. Schwab Charitable is committed to really helping our donors to maximize the impact of their philanthropy, be it domestically-focused or global in scope. And we are grateful for the opportunity to partner with the likes of Stanford Social Innovation Review and CAF America, to help them achieve those objectives. Thanks very much, again, for your time.
KELSEY: Thank you, both. I really enjoyed the conversation today. Thank you, Fred. Thank you, Michael.
MICHAEL: Well, thank you, Kelsey, and thank you, Fred.
Thank you for listening. We hope you've enjoyed this episode. Please consider leaving us a review on Apple Podcasts or your favorite listening app, as it helps others discover the show. We encourage you to listen to other episodes in this series, as well as other podcasts from SSIR. This podcast series is made possible with the support of Schwab Charitable, who played an important role in the selection of topics and speakers. For important disclosures and a transcript of this episode, visit Schwabcharitable.org/impactpodcast.
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If there is one thing that the events of the past year have helped to remind us of, it's the simple fact of how interconnected our world truly is. Issues like public health or the environment are global in nature, and new solutions to global challenges are being innovated all around the world. But when you're a donor here in the United States who may be looking to support causes or organizations in other countries, how do you get started? And how do you make sure that you're maximizing the impact and effectiveness of the support that you're providing? Many of us may sincerely want to "be the change we wish to see in the world," as Mahatma Gandhi famously said; but how do we do that?
Moderator: Michael Gordon Voss, publisher of Stanford Social Innovation Review
- Fred Kaynor Vice President of Business Development & Marketing, Schwab Charitable
- Kelsey McCarthy Director of Private Donor Services, Charities Aid Foundation of America
After you listen
- Download the Schwab Charitable Giving Guide to discover information, resources, and activities to help you maximize your charitable giving
- Discover the details around how to use a Schwab Charitable™ donor-advised fund to extend your generosity beyond the United States and make a difference almost anywhere in the world.
- Learn more about giving appreciated non-cash assets—such as publicly traded securities, real estate, or private business interests—held more than one year to leverage your most valuable investments to give even more to charity.
Since 1992, CAF America's core mission has been to enable cross-border giving by Americans to validated charities and charitable projects across the world. Through donor-advised giving and their industry-leading organizational validation protocols, they enable donors to make strategic, cost-effective, and tax-advantaged gifts while reducing the risk, reputation exposure, and administrative burden associated with cross-border giving.
- Read CAF America's report: 12 Months Later: The State of the World's Nonprofits/The Voice of Charities Facing COVID-19 | Volume 7 which polled 496 charitable organizations operating in 129 countries to report on their current status and outlook for the future.
- To read all of the CAF America reports that chronicle the impact of COVID-19 on nonprofits worldwide, check here.
- Learn more about the services and programs offered by CAF America.
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