Coconino Voices: Arizona tax credit is a mixed blessing for nonprofits | Columnists


More than two decades ago, when the Arizona legislature passed the first tax credit bill, many nonprofit leaders believed it would stem the trend of less and less households to make charitable donations each year and would be the answer to their fundraising needs. Unfortunately, that didn’t happen.

And while hard numbers are slow to come out and often vague at best, the percentage of Arizona’s economy given has remained stable at best over these two decades, and the share that is contributed by large institutions and very wealthy increased dramatically – two groups on which the tax credit had little or no effect. Why is that?

The simple answer is that nonprofits are about relationships, not transactions. And the tax credit most often reduces the relationship of a donation to a nonprofit to a transaction, a simple exchange of dollars that doesn’t require the donor to actually commit to a cause.

A wise man once said to me, “It doesn’t do anything if it doesn’t hurt a little.” It is understandable that the management of a non-profit organization decided to ask people to lend them money until the state pays it back was much simpler than asking them to engage in the mission of a non-profit organization. The problem is that when we took the easy way out, we failed to make our donors want to be part of what we were doing. In other words, they did not have to “join”.

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Nonprofits are based on the relationships between the nonprofit organization and those it serves and the donors who make this possible. A big part of what a successful nonprofit does for those it helps is to offer empathy and hope that the future will be better. That means individual concern, not just dropping a box of food in the trunk of their car while they wait in line for a document.

They also offer hope to their donors that there are solutions for those who are suffering, and if we all come together we can really solve some of society’s problems. This personal connection is why nonprofits get started and why they do the amazing things they do. Without it, nonprofits become just another handout bureaucracy.

“Telling your story” — identifying the problem and explaining how you will solve it — is the most important thing a nonprofit does. It’s what creates the kind of “true believer” donors who will share this story with friends and neighbors, volunteer, or perhaps even find the solution to some of the toughest problems you face. These are people who will say “no, I want to” when you suggest that their donation might be a little too generous. Getting to that point isn’t as easy as the simple tax credit deal, but when you have these kinds of people in your corner, the odds of truly fulfilling your mission are multiplied by many.

Another problem with tax credit and institutional funding is that to qualify, you may have to change or drop programs that currently work for you.

When we first spoke to Paula Sedillo, Founder and President of Tennies for Tots, about her all-volunteer efforts to provide new shoes to children under 5 enrolled in Head Start programs across North Arizona, I asked if she had applied to be a tax credit nonprofit. She said she did, but hadn’t heard back yet. Turns out it was lost in the mail. When she sent copies, the response was that the schoolbags and books she offered with the shoes weren’t ‘essential’, so she couldn’t include them in the calculations.

Here’s a single mom who volunteered to fundraise, buy the best deals on shoes, and deliver them to 30 different Head Start programs throughout central and northern Arizona and for every $10 she receives, she can give a child living in poverty a new pair of shoes, socks, a book and a school bag. Shouldn’t a program like Paula’s be exactly what the tax credit was created to encourage, neighbor helping neighbor? Again, the system treats helping our needy as a transaction and not as a relationship that wants to find a long term solution.

As the tax credit gained more visibility, most social service nonprofits adapted what they do to conform to the tax credit guidelines, whether that improves or not their program. That’s not how it should work. The people who provide the service have a much better idea of ​​what works than the lawmakers in Arizona. And now, with so many nonprofits fighting for their piece of the tax credit pie, the sales work around their abandoned mission becomes more important again. But now, even if we can still attract the donors we need, our relationship with them is much more fragile – if they have only advanced us taxpayers’ money, they really have very little skin in the game.

It’s time for non-profit social service organizations to come back and tell us about the wonderful thing they are doing and their many accomplishments instead of saying it really costs nothing to make these things happen.

Despite these reservations and an email from us to clarify exactly what we were doing, we were delighted when we received notification that Tennies for Tots had qualified as a tax credit charity, QOC code 22452.

Bill Packard and his wife, Barbara, have spent the past two decades as volunteers revitalizing or establishing nonprofits, including thrift stores, food pantries and a free medical clinic. They are the authors of the Going Full Circle books. They can be contacted at [email protected]

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