Why some charities are seeing fewer donations this year

Paul Trusten (left) rings bells for the Salvation Army.
Paul Trusten, left, rings bells for the Salvation Army with his 13-year-old son Logan Vanguilder, right, outside of the Macy's at the Burnsville Center earlier this month.
Christopher Juhn for MPR News

Charitable giving has been on the rise across the nation for years, but now several local nonprofits say donations have dropped way off since last year.

Staff Sgt. Felix Montalvo grew up in a poor neighborhood in Lansing, Mich., and he still remembers opening Christmas presents from Toys for Tots.

"These were like army men, you know," he said. "The figurines themselves couldn't move, but I was extremely appreciative. I think to this day that it's a classic gift."

When Montalvo left home, he joined the Marines and was assigned a job at Toys for Tots, in 2006. He says his background makes him uniquely qualified.

"I think it helps me relate to our demographic. It makes me more passionate to kind of spread the word and do those good deeds," he said.

But there's a problem. The Minneapolis warehouse is behind on toy donations.

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Last year they gathered, sorted and gave 283,000 toys to 138,000 children. This year, with less than two weeks to go until Christmas, they've gathered just 76,000 toys.

He thinks they'll be able to double that number before the big day. But even if they do, underprivileged children in Minnesota will get 120,000 fewer toys than last year.

Just to be clear, 150,000 is still a whole lot of toys, but Montalvo says, it's hard not to dwell on the shortfall.

"Our mission is to have every child receive a little bit of Christmas on Christmas morning," he said. "And whether that's one toy or two toys per child, it really depends on how much we get in donations."

And Toys for Tots is not alone. The Salvation Army is also lagging behind last year's fundraising efforts in Minnesota.

In the metro area, fundraising is roughly $400,000 behind last year's numbers. In greater Minnesota, it's $330,000 behind.

"If we don't make our goal, we will have to reduce services or adjust budgets throughout the remainder of the year," said Salvation Army Maj. Bob Doliber.

Doliber blames some of the funding gap on changing technology. It's not that people aren't feeling generous, it's that they're buying more gifts online. And the people who are shopping at brick and mortar stores don't carry as much cash as they used to.

Doliber installed special barcodes on all the kettles in the Twin Cities. People can scan them with their smartphones and donate online. It hasn't really caught on yet.

But even that's not the whole picture, because most of the funds raised by the Salvation Army come in the mail. He thinks the bulk of the shortfall might have more to do with the recent tax changes.

"Well, from what I understand with the tax reform, and I'm not a tax expert, but the standard deduction has generally doubled, and so it might affect those that make very large donations and consider the tax consequences," Doliber said

Brice McKeever is a researcher at the Urban Institute's Center on Nonprofits and Philanthropy, and he says the tax bill is making a lot of nonprofits really nervous.

"There's a lot of belief in the nonprofit sector that this change in the tax program could have drastic effects on the number of charitable contributions received by these organizations. I don't want to undersell that," he said.

The fear is that by doubling the standard deduction, people who itemize their tax returns will be disincentivized from making charitable contributions. But McKeever says it's too early to know if that's actually happening.

From the preliminary data, he says Americans seem to be giving as much as they ever did. He says, they might just be giving to different charities. The number of nonprofits in the country has increased faster than giving.

He did offer one piece of hope for struggling charities: Most people are huge procrastinators.

"The standard biggest giving day of the year is always the last day of the year. For tax purposes," he added.

Which, of course, isn't much solace to Montalvo at Toys for Tots.