Editor’s note: James Abruzzo is a well-known management and compensation consultant to nonprofit organizations, an international arts management professor, and frequent contributor to various publications, including The Berkshire Edge.
Many of us in the nonprofit sector see a stark difference between the policies of the two political parties and believe what we stand for and work for would be best served under a Democratic administration. But most of the electorate feel differently—most voters seem to feel less strongly about access to health care, a clean environment, women’s rights, the collection and distribution of taxes, arts and culture, and America’s leadership in the world.  Donald Trump and his administration will likely profoundly affect the nonprofit sector, as I will discuss here, ending with some personal reflections.
The ArtsÂ
In the naïve days of the culture wars (the 1980s and ’90s), the debate regarding the presidential election centered around the National Endowment for Arts (NEA); a Republican president would threaten to cut the NEA appropriation because the government “should not be in the business of funding culture,” particularly works deemed “pornographic” or “sacrilegious.”
President Trump proposed eliminating the NEA during his first term, but Congress preserved the funding; there is a good chance that Congress will support Trump this time. However, the NEA funding is small and insignificant. Although the threat of eliminating NEA funding (now a possibility) would suck up the time and energy of arts organizations in protest, the profound effect will come from Trump’s tax policies.
Arts organizations receive most of their unearned (donated) income through contributions, and the federal administration’s actions significantly impact the arts and culture in America through tax laws. Arts organizations traditionally receive between 70 percent and 80 perecent of their contributions through individual gifts—high dollar commitments to endowments or building campaigns (think David Geffen and Philharmonic Hall). Tax deductions for individual donations are likely to continue (and no administration has ever tried to reverse this); however, the most recent Trump Tax Cuts and Jobs Act (TCJA) in 2017 adversely affected individual giving. For example, because of the new tax act, approximately 90 percent of individuals now file standard deductions (where there is no tax benefit to listing charitable contributions). In contrast, the percentage was approximately 70 percent before the Trump tax act. In other words, 20 percent fewer taxpayers were rewarded (or at least incentivized) by the tax law to reduce their taxes by contributing to nonprofit organizations. The wealthier donors will continue to contribute, but the many small donors will likely continue to file standard deductions under Trump. While the precise effect is unknown, Indiana University’s Lilly Family School of Philanthropy estimated that $13 billion to $20 billion of donations to charities would be lost.
The more substantial but less obvious impact of the TCJA is the inheritance tax deduction, which more than doubled for a married couple to over $24 million. That means that, after the death of a wealthy couple, the first $24 million of inheritance is protected from estate taxes, whereas in the past that amount was under $11 million. In the past, the beneficiaries of wealthy families would need to sell valuable art and collectibles and land or real estate to pay the estate taxes, encouraging them to donate works of art or property to nonprofit organizations. The Trump administration will likely continue many of the TJCA components (higher limits on estates, lower tax rates) scheduled for elimination.
Financial stability is undoubtedly a significant contributor to the health of the arts sector, and a president’s approach to and philosophy about taxes are measurable. However, in the case of President Trump, his much more important, almost existential, effect on the arts will have to do with freedom of ideas and creativity, allowing the arts to express new ideas and lead the country to a new level of democracy. There may be fewer guardrails to states that are now engaged in banning books and suing arts organizations over pseudo-Christian morality.
As our differences over sexual orientation, race, and religion have intensified, we can only imagine the negative effect a Trump administration will have on the artists, boards, arts leaders, and rank and file of our arts organizations. Just as a generation of American Black artists emigrated to France in the 1920s because they were unwelcome at home, and a generation of Jewish artists left Germany in the 1930s, we may find the very core of American creativity departing the US during the next Trump administration. And we may discover more self-censorship among arts organizations.
NGOs and Other Nonprofits
Based on Trump’s stated policies, the NGO and International Nonprofit Sectors will be affected. The next administration will significantly influence their funding, policy support, regulatory environments, and the health-related, social justice, education, environmental, and social service sectors..
During Trump’s first presidency, there was a noticeable shift towards an isolationist foreign policy. These policies resulted in reduced funding for international aid and development programs. Global NGOs will likely face continued or increased funding cuts in the next Trump administration. The administration’s focus on “America First” will continue to reduce grants and contracts for international development projects. Additionally, the withdrawal from international agreements and reduced participation in global initiatives could limit the operational scope of NGOs focusing on issues like climate change, human rights, and international health.
Reductions in funding will strain NGOs, particularly those relying on federal grants. For instance, beyond private philanthropy, the NGO sector is fueled by federal grants through USAID and other programs, totaling over $20 billion annually. Trump’s first-term budget proposals included cuts to foreign aid and social programs, which will likely force profound service reduction and, for the sector itself, a significant decrease in headcounts and infrastructure investments.
Trump’s approach to healthcare was characterized by efforts to repeal the Affordable Care Act (ACA) and implement significant changes to healthcare funding. The health-related nonprofits, particularly those focused on access to care, will encounter a challenging environment. Trump’s 2019 budget proposed to cut $763 billion in health care support over the next decade. Future efforts to reduce Medicaid funding and roll back ACA provisions could increase demand for services these nonprofits provide, straining their resources. Moreover, policies limiting women’s reproductive rights and access to certain health services will strain the resources of health nonprofits to fill the gaps left by federal policy changes.
Under the next Trump administration, social service organizations will also see a continued push toward reducing federal spending on social programs. Nonprofits that rely on government contracts and grants to provide essential services like housing, food assistance, and employment programs may face tighter budgets and increased demand. Trump’s 2021 budget proposed cutting $1.6 trillion over ten years from programs that help people with low or modest incomes meet basic needs. Organizations like local United Way and food banks, among others, will be crushed trying to fill the gap. Furthermore, immigration policies under Trump, which emphasized stricter controls and deportation efforts, will lead to an increase in the need for legal and social services for immigrant communities.
Conclusion
To summarize, the second Trump administration will pose significant challenges, including funding cuts and policy changes, requiring nonprofits to fill essential gaps in services with fewer resources. The cultural environment may also encounter significant challenges.
I have gone from disbelief to mourning and then acceptance overnight. But with acceptance comes resolve. I am resolved to maintain my values, to continue to support and work for the sector, to continue to provide my insights and guidance to those leaders and boards of community service organizations, symphonies, universities, United Ways, and NGOs for whom the following four (or more) years will be different, challenging, perhaps demoralizing; to listen to the entire country, to welcome other opinions and ways of doing things, but always, always, to strive for a civil society.
