Poll: Most Americans know little about nonprofits, doubt efficacy

The first comprehensive poll to measure public attitudes on foundations and nonprofits offers signs that charitable organizations are more trusted than other institutions, such as businesses, governments, and the news media. But it shows many warning signs for nonprofits, given how little Americans know about charities and the pessimism they have about the ability of charities to make a positive difference in the world.

Two especially disturbing findings: Fewer than 20 percent of Americans think nonprofits are on the right track, and only a third believe charities contribute a lot to society.

Perhaps most surprising is that only 5 percent of Americans think they or someone in their immediate family has been helped by a nonprofit, even though one in 11 work for a charitable organization and a big share of people are served by colleges, hospitals, cultural organizations, or religious congregations or participate in advocacy drives by environmental, civil-rights, and other nonprofits. And when asked what they know about philanthropy, two thirds said they were “novices.”

“Most people benefit from the services that nonprofits provide, but most people aren’t aware of how these public goods are provided,” said Una Osili, associate dean for research and international programs at the Indiana University Lilly Family School of Philanthropy, which published the study based on a survey of about 1,300 people conducted in the summer of 2022.

The study found that nearly 40 percent of Americans trusted nonprofits to do what is right, reflecting a higher confidence in charitable and philanthropic organizations than in Congress and large corporations, which both registered positive responses of less than 6 percent.

But when asked if philanthropy and nonprofits were “off on the wrong track,” a majority said they did not know. When those unsure results were stripped out, only four in 10 Americans felt nonprofits were headed in the right direction. And when asked about nonprofits’ ability to solve problems, only 14 percent said they had a lot of confidence they could. Still, that is better than any other part of society — governments, businesses, and others ranked even lower.

The downcast view of charities is cause for alarm for charities as they struggle to raise more money from an American public less inclined to give than they have been in the past. Twenty years ago, about 85 percent of Americans gave. That share has steadily declined to about 50 percent. At the same time, advocates for nonprofits and foundations have not found traction on Capitol Hill, where the push for legislation designed to jump-start giving has been fruitless.

One of the biggest pieces of the legislative agenda for nonprofits in Congress, extending charitable deductions to all Americans, has stalled for the past two years. After a broad 2017 tax bill doubled the standard deduction for taxpayers, only the richest Americans have had easy access to tax write-offs for their charitable gifts. During the Covid crisis, a deduction was made available for everyone, but that provision expired at the end of 2021.

The failed push to extend the deduction may not only be the result of lack of knowledge about nonprofits — or lack of confidence in their work. It might also stem in part from the fact that Americans say they wouldn’t give more if they had access to a deduction. Forty-eight percent of those polled said they would give the same amount they do now even if they had a tax break that would cut the cost of their giving.

Among the other findings:

The level of trust bestowed on a nonprofit depends on the type of organization. Religious institutions got the most trust, at about 36 percent, followed by community foundations (31 percent) and secular nonprofits (23 percent). Private foundations had a lower rate of trust (20 percent), with giving by corporations securing the least good will (10 percent).

Americans have a relatively limited view of what constitutes charitable activity. Organizations with tax-exempt status should be allowed to provide disaster relief, according to 95 percent of those surveyed. But activities that veer into policy were viewed with a more jaundiced eye. About three quarters of Americans said nonprofits should be allowed to push for racial equity. And a slim majority said nonprofits should be allowed to engage in voter mobilization, policy advocacy, and litigation, which are the bread and butter of many nonprofits.

The small donations that low- and middle-income people give command the greatest respect from Americans. Sixty percent see small-dollar donors as more important to the country than those who give big. But researchers say other findings in the study suggest that at least half of Americans consider donations from the megawealthy to be very important.

Americans don’t think charities, foundations, or philanthropists are very transparent. Religious charities topped the list of organizations considered transparent, but just one in four Americans said they were transparent. About 8 percent said high-net-worth donors and corporate grant makers were transparent. All that needs to be taken with a grain of salt: Less than half could name a major philanthropist. Of those, more than one in four named Bill Gates.

Knowledge about foundations and the rules they must follow is low. Nearly 85 percent of Americans were unaware that foundations must distribute 5 percent of their assets each year to charity. One-third were not familiar with payout requirements, and one-third thought the minimum annual payout exceeded 20 percent. Also of interest is how the public feels about charges that foundations hoard assets: The majority, the report said, have no opinion. Of those who had an opinion nearly eight in 10 said foundations should exist in perpetuity. The remainder said they should give their assets away quickly or immediately.

Obstacle to Public-Policy Change

The lack of knowledge about nonprofits and philanthropy and their role as problem solvers is a longstanding problem, said Kathleen Enright, president of the Council on Foundations. She pointed to a seven-year public-awareness campaign co-sponsored by the council, the Philanthropy Awareness Initiative, that ended in 2012. The campaign, which sought to provide foundation leaders with ways to communicate the importance of their work to policymakers, found that only four in 10 people could name a foundation.

It’s important for the broader public to have a good working knowledge of nonprofits, she said, because if charities and foundations aren’t viewed as “stakeholder” groups, Congress will ignore their wishes when they enact changes to federal grant making or revamp charitable-giving incentives in the tax code.

One of the reasons such a large proportion of people in the Indiana University survey didn’t think they or their family had benefited from a charity in the past year may be that tax-exempt jargon, such as 501(c)(3) organizations, community foundations, and donor-advised funds, “is just Greek to most people,” said Enright, who, like others interviewed for this article, had not reviewed the study.

Most people have relatives who have benefited from cultural programming, health care, or community activities that were provided by a nonprofit, she said.

“None of those organizations could thrive without philanthropy,” she said. “Members of the broader public know the value of nonprofits and philanthropy in their life and in their community, but maybe they’re not connecting them to a specific sector.”

Dampening Giving Rates

The Lilly School’s Osili said that while the “declining donor story” is well known to nonprofit fundraisers across the country, most Americans are oblivious to the fact that the share of people who give has been dropping. More than 60 percent of those surveyed believed that that percentage has increased or stayed the same over the past two decades. That’s a problem, Osili said, because if people think giving remains a vital part of most American households, they may hold off on donations, figuring other donors will step in to fill pressing needs.

Osili suggested nonprofits seize on the survey results to drive home the fact that fewer Americans are giving and that many nonprofits are in financial jeopardy. The survey results, she said, suggest that rank-and-file donors are primed to give.

She also noted that younger donors were more likely to see advocacy campaigns as a key part of what charities do — so she said fundraisers for groups that do such work should play that idea up to attract gifts from donors under 40.

The fact that people have such favorable feelings about the role of charity in responding to disasters but hesitate to support them doing policy advocacy is a big problem for nonprofits, said Michael McAfee, president of PolicyLink, a research and advocacy nonprofit. The scope and scale of the problems facing society are so large that responding to people in need during emergencies will fail to secure lasting improvement in the world, he said.

“We need to help people understand that just focusing on disaster response for nonprofits is extremely short-sighted,” said McAfee.

‘Curse of Expertise’

The Lilly School study complements the work of the Generosity Commission, a group of nonprofit experts created two years ago to investigate why giving is in decline and determine whether some forms of generosity in America — like crowdfunding or mutual aid — are accurately counted. The data on those gifts may not be as easily captured as contributions to established nonprofits.

The idea that people aren’t up to speed on the inner workings or philanthropy and the policy debates that surround nonprofits shouldn’t come as a surprise, said Deborah Small, a professor at the Yale University School of Management and member of the Generosity Commission’s task force on marketing.

Likewise, Americans largely don’t know the intricacies of a politician’s policy positions, she said. Nor do they understand the ins and outs of how their retirement funds are invested. Small said that as long as people have sufficient trust in organizations, it isn’t “fatal” if they don’t know all about things like the universal deduction or the 5 percent payout rule.

Nonprofit leaders should be wary of the “curse of expertise” and try to be aware of the extent to which people know about nonprofit practices.

“It would be better if everybody was actually better educated about everything. But the reality is, humans have a limited processing capacity and memory and a lot to think about and do in their lives,” she said.

Still, she said, the report could be a “useful wake-up call to people in the nonprofit world so that when they do marketing or design communications, they’re thinking appropriately about their audience’s understanding of things.”

From The Chronicle of Philanthropy