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Rumblings of a revolution

If you were asked to name an occupation that soon will be transformed by artificial intelligence, accounting probably isn’t the first one that comes to mind.

Nonetheless, CPAs and accounting professors say that AI — combined with other technologies such as blockchain — may radically change the profession’s procedures within the next decade.

“The accountant of today is going to be different from the accountant of tomorrow — and far, far different from the accountant of yesterday,” says J.K. Aier, an associate professor and area chair of accounting at George Mason University. “Things are changing as we’re trying to understand it. … It’s very difficult to predict what an accountant will be doing 10 years from today.”

Global accounting firms such as Deloitte, PricewaterhouseCoopers and KPMG already use machine-learning software to handle some auditing tasks that entry-level employees typically handled, such as reviewing lease contracts.

These firms also are investing hundreds of millions of dollars in proprietary artificial intelligence technologies that will be used in the 2020s, says Gary Thomson, Richmond-based regional managing partner for Dixon Hughes Goodman, the largest accounting firm in the South.

Because of these trends, a national professional association, the American Institute of Certified Public Accountants (AICPA), announced in October that it’s developing an AI-based auditing platform, Dynamic Audit Solution (DAS), which will be available to all of its 14,000-plus member firms. Funded with $50 million from AICPA members, the DAS initiative aims to level the playing field so that AI technology won’t be out of reach for small firms.

“There’s [almost] 15,000 firms in America that do audits, and a lot of them are small- and mid-sized, and we wanted to make sure that they also had the opportunity to leverage these new capabilities,” says Erik Asgeirsson, president and CEO of CPA.com, AICPA’s technology subsidiary. “It’s an exciting time for the accounting profession due to how technology is really allowing them to enhance their value proposition.”

AI technology, Asgeirsson says, will allow accountants to examine all of a client’s financial records during an audit — no matter how large the data — instead of just reviewing sample sets.

“You’re going to determine things that you weren’t able to determine in audits that weren’t leveraging these platforms,” he says. “The modern audit is going to allow the auditor to tell the client that they’ve looked at the full data set … [and] found such things as double-billing errors, payments that weren’t being done correctly … and they’ll basically be giving the client much more assurance around the integrity of their data.”

Blockchain, too
In discussing the potential impact of AI on accounting, industry experts often mention blockchain in the same breath. Developed in 2008 for the cryptocurrency bitcoin, blockchain is a system for encrypting a secure ledger of transactions that — in theory — cannot be altered.

Used as an accounting tool, blockchain could allow tamper-proof, real-time access to a company’s financial transactions at any time. Combined with the ability of advanced AI to review all records, blockchain could be a game-changer for corporate financial auditing.

“I’ve been quite nervous about [blockchain],” says Ashley Austin, an assistant professor of accounting at the University of Richmond. “It’s supposed to be this perfect ledger. And if you have a perfect ledger, why do you need an auditor to come audit it? Why do you need accounting majors to go work there and a professor to teach them, etc.?”

Thomson has heard similar concerns about blockchain “and rightfully so on the part of practitioners about: Does this in some way potentially inhibit growth in the CPA world, particularly in the auditing world?”

Nonetheless, Thomson and Austin say regulators probably will need to review blockchain and some AI technologies to ensure they can be used safely and securely for auditing. Such a delay may give the industry more time to adjust.

Fewer data-entry jobs?
A greater likelihood in the short term, experts say, is that artificial-intelligence technologies may result in bigger accounting firms hiring fewer employees for jobs such as doing data entry, reviewing leases and providing third-party verifications of a client’s financial transactions. These rote tasks can be handled by AI and optical-character recognition software.

“You probably can eliminate the data-entry people. You can eliminate probably the first line of supervision. Whereas before you may have had several accounts-payable supervisors, now you may only have one [person] running automated accounts payable,” says Douglas E. Ziegenfuss, chair and professor of accounting at Old Dominion University.

Some large accounting firms now are recruiting tech-savvy accounting majors with dual majors in information technology or business analytics. These recruits can utilize the latest AI tools and analyze the findings.

“They need to be thinking a little more like a scientist than accounting majors have in the past, coming up with hypotheses,” Austin says.

In some cases, Ziegenfuss says, CPA firms are hiring tech workers and training them in accounting. “They’re sending them back to schools that cater to nontraditional students like ODU to pick up the accounting,” he says. “They feel it’s easier to do that than to take an accountant and make an IT or business-analytics person out of them.”

Schools adjust
Driven by this hiring pattern, many universities are adjusting their accounting curriculums to include an increased emphasis on data science and analytics.

GMU, for instance, now offers a graduate certificate in accounting analytics aimed at professionals wanting to upgrade their skills. Likewise, Virginia Tech began a partnership with KPMG last fall to offer a one-year master’s degree in accounting that includes training in data and analytics. One of nine universities nationwide working with the firm on such a program, Tech receives training from KPMG and access to its proprietary machine-learning analytics software. That software also is used in a senior-level, undergraduate accounting analytics course.

Students use KPMG’s software “to work with big data in terms of dealing with hundreds of thousands and millions of records of observations and being able to get comfortable in working with that. And then also being able to display the results so that it makes sense to decision makers,” says John J. “Jack” Maher, head of the Department of Accounting and Information Systems at Virginia Tech’s Pamplin College of Business.

Anticipating the big technological changes to come, everyone in the profession “needs to up-skill,” Asgeirsson says. “We’re all going to have to put in 100 hours of learning, 100 days of learning, over the next four or five years. … You just can’t rest on what you’ve learned because [the accounting] business and operations are changing.”

Full employment?

“If we sleep in on a Saturday, it’s a pretty rare thing,” says Highland County resident Sarah Collins-Simmons, “because we’re either farming or working on one of our [rental] properties.”

Born in bucolic Nelson County, Collins-Simmons, 31, now lives with her husband, Josh Simmons, in remote, rural Highland, a mountainous county bordering West Virginia. Known for its natural beauty, Highland has the distinction of being the state’s least-populated county, with fewer than 2,300 residents, including about 200 children enrolled in the county school system.

Collins-Simmons, who holds a master’s degree in landscape architecture from the University of Virginia, works as the orchardist and production supervisor for Big Fish Cider Co. in Monterey, the county seat.

Her husband, a Highland County native, worked for years as an independent contractor, doing carpentry, electrical and plumbing jobs about an hour southeast in Staunton, until he landed one of the rare full-time jobs in Highland offering health benefits. He’s now the county’s one-man building inspections and zoning department.

To help make ends meet, the couple work a few other jobs on the side, ranging from managing a farm for a military family stationed overseas to fixing up and renting investment properties.

“I love rural life,” Collins-Simmons says. “People that choose to live here tend to be enterprising and try to make the best of it. … To live a rural lifestyle, you have to be motivated, driven and enterprising. You may not have the opportunity for a full-time position, but there are plenty of opportunities to make good work for yourself if you are self-motivated.”

As Virginia’s unemployment rate fell to a 17-year low of 2.8 percent in December, rural counties such as Bath, Grayson, Highland and Nelson reported rates below 3 percent, just like localities in economic powerhouse regions such as Northern Virginia and Richmond. Overall, 76 cities and counties had jobless rates under 3 percent during December.

Nonetheless, economists and local officials say the numbers in rural areas and smaller cities can be deceptive, masking their struggles to retain young, working-age adults with 21st-century skill sets.

“We are pleased to see the unemployment rate continue to decrease in Virginia and believe it is a strong testament to the caliber of our workforce,” says Barry DuVal, president and CEO of the Virginia Chamber of Commerce.

“In 2017, while developing Blueprint Virginia 2025, the Virginia Chamber of Commerce traveled throughout the commonwealth listening to the needs of employers and the feedback we received was that access to workforce talent is on the top of every employer’s mind,” he says. “While all regions of Virginia are not growing at the same rate, all regions are growing and for that we are grateful. While we have a lot to be proud of, it is also important to recognize that there is much left to do in order to reposition Virginia, once again, as the best state for business.”

‘Growth begets growth’
Virginia’s employment boom is largely driven by the “Golden Crescent,” an urban swath running from Northern Virginia to Hampton Roads where employers in industries ranging from tech to retail to construction compete for workers in the tight labor market.

“Growth begets growth” in areas like Northern Virginia, where a highly skilled workforce once connected to federal contractors now attracts droves of technology companies, says Ann Macheras, group vice president with responsibility for microeconomics and research communications in the Federal Reserve Bank of Richmond’s research department.

Unemployment in December 2018 dipped to 1.7 percent and 2.1 percent, respectively, in prosperous Arlington and Fairfax counties.

Amazon’s much-publicized HQ2 headquarters in Arlington and Alexandria will create an estimated 25,000 jobs in Northern Virginia, with an average salary of $150,000 — many of them highly skilled technology positions. And Virginia’s state government and technology business leaders have been saying for the past few years that the technology industry has a pressing need for as many as 17,000 cybersecurity professionals in Virginia, mostly in Northern Virginia’s tech hub.

The competition to fill technology jobs also is fierce in the Richmond metro area, where December unemployment rates in suburban Chesterfield and Henrico counties were 2.5 and 2.3 percent, respectively.

“We’re actually in the process of making an offer to a student who hasn’t even graduated yet, but we want to lock him in and make sure that he comes to us once he finishes his degree,” says Aaron Mathes, the Richmond-based vice president of mid-Atlantic business operations for CGI, a global information technology services firm.

“As the economy has picked up … the ability to retain [workers] is a bit more challenging, but frankly [in] the IT workforce, it’s been difficult to recruit for a long time. This is a highly competitive, sought-after set of skills.”

A missing workforce
Even though the unemployment numbers are similar in Virginia’s rural counties and smaller cities, the situation on the ground is much different.

“In rural areas where employment has remained steady or increased, the [age] 18-to-34 population has still declined in recent decades,” says Hamilton Lombard, a state demographer and research specialist for the Demographics Research Group at the University of Virginia Weldon Cooper Center for Public Service. (According to Census data, Virginia’s largest concentrations of 18- to 34-year-olds are located in metro Richmond, Northern Virginia and Hampton Roads.)

Even regions that encountered major employment losses during the past 20 years, such as Martinsville and Danville areas, posted December jobless rates of 3.4 and 3.6 percent, respectively. Nonetheless, Lombard says, those numbers don’t reflect the fact that “a much larger share of their population [is] just not in the workforce,” compared with the state’s larger metropolitan areas.

For example, 33 percent of people from ages 16 to 64 in rural Henry County aren’t participating in the labor force, compared with 20 percent in suburban areas such as Fairfax and Henrico counties. And the ranks of those not seeking jobs are similar in other rural localities, such as Highland (29 percent), Grayson (33 percent) and Smyth (34 percent) counties.

This is due to a variety of factors, says Lombard, including out-migration of young working-age adults looking for better employment opportunities elsewhere.

Additionally, many older people who lost factory jobs in the early 2000s have chosen to retire early in their 50s and 60s, either because they couldn’t find new jobs that paid as well as their old jobs or they didn’t have the training, skills or desire to switch careers late in life. A significant number of retirees also move to rural areas from metro areas. (In Highland, for example, where the median age of the population is about 53 years old, about half of the county’s housing stock is owned by retirees and owners of vacation homes who visit during the summer and fall.)

Rural localities also have more disabled working-age adults as well as greater numbers of stay-at-home parents, Lombard says. (Home schooling rates are as high as 10 percent in some rural Virginia counties, he points out.) And other factors also come into play that skew the numbers of people not participating in the labor force, such as the fact that most of the state’s prisons and regional jails are in rural areas.

In Southern Virginia, about 30 percent of adults not in the workforce live in “group quarters” facilities such as prisons and nursing homes, Lombard says. For example, Greensville County, home to Greensville Correctional Center, counts 52 percent of its population outside the workforce. (For census purposes, inmates are counted as local residents.)

So, what does the employment landscape look like in Virginia’s rural counties and smaller cities?

Long commutes
In many areas, it means commuting long distances for work and losing college-educated younger people to bigger metro areas.

In rural Russell County, skilled software developers with computer-science degrees commute from as far away as Kingsport, Tenn., and Bluefield, W.Va., to work at CGI’s information technology center, which employs about 400 people in Lebanon.

“It is challenging to find … jobs in the computer science field [in rural localities,]” says Angela Costagliola, manager of consulting delivery at the CGI center. “When CGI came here to Russell County, it was having corporate America in your backyard without having to move to a major city. … Students from college often think they have to move to Northern Virginia for a [job] in IT, but this does allow for them to come back to their grassroots and have a career in Russell County.”

Rural people “will drive one hour for a good-paying job,” says Mecklenburg County Administrator H. Wayne Carter III. “The vast majority of [Mecklenburg residents] who are looking for full-time employment have been able to find it,” he says, but some have to commute south to North Carolina’s Research Triangle.

Also like many other rural localities, Mecklenburg lost thousands of manufacturing jobs to factory closures between 2000 and 2011, and recovery has been slow. “While the economy has gotten a lot better in more urban areas, we lag behind,” Carter says. “We always have, even before the recession. We’ve always lagged behind several years, so it takes a while when the economy gets good for it to catch up to us.”

In January, Microsoft announced it would add 100 jobs at its Mecklenburg data center, the sixth expansion since 2010 at the facility, which already employs 300 people.

But the data center’s more skilled employees won’t necessarily come from Mecklenburg, Carter acknowledges. The county has fewer technologically skilled workers, despite the fact that its two high schools and area community colleges are teaching computer coding. Holding on to college-educated Mecklenburg natives also is challenging.

“It’s hard to keep your young people here without a huge base of job opportunities for them,” Carter says. “When they can move to a more urban area or suburban area like Chesterfield and have 12 different job offers versus one here, it’s hard to keep them here for that.”

One store for groceries
Infrastructure and amenities also are problems for these communities.

Monterey is pretty much the only place in Highland County where you can get a cellphone signal. It’s also one of only two areas in the county with water and sewer. The Dollar General there is the only store in the county where residents can buy groceries. Highland’s broadband internet access is better than in most rural Virginia localities, and the county is working to get high-speed, fiber-optic internet installed within the next decade. Nonetheless, lack of infrastructure makes it difficult to attract businesses to Highland, says Nancy Witschey, a member of the county’s economic development authority.

Also, there aren’t many opportunities for young adults to meet friends and date locally. As a result, some young professionals like physicians rarely stay long. “Life in Highland centers around the home, the church and the school,” Witschey says.

Full-time jobs in the county are difficult to find. The top employers are the county government and school system. The biggest private employer, a bank, has fewer than 20 workers.

Underemployment is also prevalent in rural areas, especially for college-educated people, says Robin Sullenberger, the retired CEO of the Shenandoah Valley Partnership, an economic development organization. He also is a former member of the Highland County Board of Supervisors. “Frankly, a lot of people in many rural areas … have just given up on any expectations that there are going to be quality jobs available to them, so they take other steps to provide for their families and make some amount of money regardless of whether it’s a sustainable wage or not.”

Many work odd jobs or hold multiple part-time jobs, either because full-time work isn’t available or they need flexible schedules so that they can also farm, Sullenberger says.

“My sarcastic bumper sticker is ‘Great place to live, hard place to make a living,’” says Betty Mitchell, Highland’s volunteer economic development officer.

21st-century skills
While there is no quick way to fill the opportunity gap between Virginia’s rural and metro communities, officials say the answer lies in creating diversified local economies and providing workers with 21st-century skills.

Rural America once provided the backbone of the nation’s manufacturing workforce, but technological advances have eliminated the large numbers of factory jobs that once fueled small cities like Martinsville and Danville. So, rural communities need to stay relevant by investing in workforce training, says Matthew Rowe, Pittsylvania County’s economic development director.

Pittsylvania recently has been on a roll, announcing more than $60 million in new investments during the past year, with 874 jobs with average salaries of $56,000. “You can live like a king in Southside Virginia on $56,000 a year,” Rowe says. But there’s one problem: Pittsylvania doesn’t have enough skilled workers to meet demand.
Pittsylvania and Danville teamed up with industry officials to develop workforce training initiatives in middle schools, high schools, Danville Community College and the Institute for Advanced Learning and Research. These training programs focus on areas such as machining, automation, welding and coding/cybersecurity.

The initiatives have been supported by more than $30 million in funding from state, local and federal governments as well as private industry. The programs largely have trained young adults, says Troy Simpson, director of advanced manufacturing at the Institute for Advanced Learning and Research, though a much smaller number of older adults also have enrolled to gain job skills.

Danville-area native Conner Lester, 25, is an example of this new workforce. He is a solutions and optimization engineer at Kyocera SGS Tech Hub, an advanced-machining research center that opened last year in Danville. He went through Danville Community College’s precision machining program and was encouraged to pursue an engineering degree at Virginia Tech. Without the community college program, he says, “I definitely wouldn’t be where I am now.”

Jason Wells, Kyocera’s lead executive in Danville, has been flooded with applications from Danville natives who would like to return. His local employees, he says, come from families with strong work ethics modeled by relatives who once worked in textile mills and on tobacco farms. And the area’s workforce training program, he says, has done an excellent job producing skilled workers. Until recently, however, many of them had to commute to jobs in Lynchburg or Greensboro, N.C., or move out of the area.

Danville once was a textile town, but employment at Dan River mills dwindled from 12,000 jobs in the 1950s to about 2,000 when the company closed operations in 2006. Today the city’s biggest employer is Goodyear, which has about 2,400 employees at a tire factory that recently celebrated its 50th anniversary.

Former Danville Mayor Linwood Wright, who now serves as an economic development consultant, says that his city survived job losses by creating a workforce with skills that aren’t dependent on a particular industry.

“The most important single asset for economic development is a trained workforce. I have been involved in locating a textile operation in a community that did not have an adequate labor force, and it was one of the biggest mistakes we ever made. I know what happens when you try to put a plant where you don’t have people to operate the plant,” he says. Providing his area’s workforce with training in areas such as precision machining and cybersecurity, Wright says, is what “we’ve got to do to be prosperous in the 21st century.”

Virginia Tech’s Jeffrey Alwang, a professor of agricultural and applied economics, agrees that the key to closing the gap between the large metro regions and smaller communities is investment in high-quality workforce education opportunities.

“The most critical area that needs to be addressed is the disparity between the prosperous areas of the state and the [struggling, rural] areas,” says Alwang. “Not only because it’s the right thing to do, but because the future of the economy of those areas depends on better trained workers, and if they’re not being educated, they’re going to be a drag on the rest of the state as time goes on.”

Why are there no new banks?

In the boom years leading up to the Great Recession, about 100 startup banks popped up across the nation each year. But since 2009 there have been no new startup banks — known in the banking industry as de novos — chartered in Virginia. And it’s been virtually the same story nationwide, with only 11 new banks opening in the U.S. during the past decade.

That may be about to change, however. Jelena McWilliams, chairwoman of the Federal Deposit Insurance Corp., said in a Dec. 6 statement that the FDIC would streamline the application process and announce initiatives to encourage the formation of more new banks.

“A pipeline of new banks is critical to the long-term health of the industry and communities across the country,” McWilliams said. “The application process should not be overly burdensome and should not deter prospective banks from applying. The FDIC wants to see more de novo banks, and we are hard at work to make this a reality.”

In an article she wrote for American Banker magazine in December, McWilliams discussed the need for small community banks, pointing out that the top 10 banking companies now hold more than 51 percent of industry assets and that about 25 percent of U.S. counties are served by only one community bank or bank branch.

As the economy strengthened in recent years, the FDIC took some small steps to encourage de novos, such as decreasing — from seven to three years — the time that startup banks are required to adhere to their original business plans.

In November, North Carolina regulators approved the formation of American Bank & Trust, the first new bank in the state since 2008. And banking sources say that Virginia also may soon see its first new chartered bank in a decade. VisionBank is a proposed community bank that would serve the Washington, D.C., area.

The bank is being formed by Mindi McClure, a founding director of the Bank of Georgetown (which was acquired by Charleston, W. Va.-based United Bank), and Richard Horn, a founding director and general counsel for WashingtonFirst Bank (acquired by Sandy Spring Bank in Maryland). Neither McClure nor Horn responded to interview requests for this article.

‘Challenging environment’
Before the 2008 financial crisis, many new banks formed with the intention of being acquired by larger financial institutions, says John Asbury, the president and CEO of Richmond-based Union Bankshares. These startup banks “funded themselves in a high-risk manner,” he explains, offering very high rates for deposits and engaging in risky lending in order to grow and become profitable quickly.

But after the economic downturn, the de novos that weren’t acquired couldn’t survive amid rapidly escalating costs of doing business. After the Dodd–Frank Wall Street Reform and Consumer Protection Act was passed in 2010, significantly increasing regulatory burdens and the cost of compliance, smaller banks merged or were absorbed by larger banks to achieve the greater scale needed to compete in the new environment. And that’s not to mention the massive expenses associated with investments in technology and cybersecurity that banks must now shoulder in order to remain safe and competitive, Asbury says.

“It’s a very challenging environment for any small bank, particularly a startup bank that has no real revenue stream or revenue base,” he says. Consequently, for small banks with less than $500 million in deposits, Asbury adds, “there are more sellers than buyers” these days.

Starting and flipping new banks used to be a profitable investment, but today’s investors are likely to find “that their money arguably could be put to better use in existing banks and financial institutions as opposed to being part of a startup that may not pay a dividend for 10 years and may not show profitability for two to three years,” says Brian Plum, CEO of Blue Ridge Bank in Luray. “People are a little bit more skeptical about the ability to see a meaningful return [from new community banks] than they would have been 15 or 20 years ago.”

No going back
While there are groups raising capital for a small number of startup banks, sources say it’s doubtful the nation will ever see a return to the pre-2008 days when new banks continually cropped up in the wake of a seemingly never-ending wave of acquisitions.

After all, even with the absence of the de novos, the banking landscape continued to become more competitive during the last decade, Asbury says, with national banks growing increasingly larger and credit unions becoming de facto banks. There is also the fairly recent rise of industry-disrupting “neo banks” — small, online-only banks such as Chime, Aspiration and Empower aiming to take on bricks-and-mortar banks by offering fee-free checking accounts.

Here in Virginia, “we have a fairly healthy, competitive community-bank community right now, [with] well-run local banks expanding their footprints, and that makes it difficult for a new bank to enter,” says Steven Yeakel, president and CEO of the Virginia Association of Community Banks.

One of the biggest hurdles for new banks is the FDIC’s minimum capital requirement, Plum says. After 2009, the FDIC and state banking regulators typically have required startup banks to raise a minimum of $25 million in capital. “In prior cycles, you could open up a bank with significantly less capital than that,” Plum says. “For a lot of communities … $25 million becomes a big obstacle to be able to pull together the initial support for [a new community bank].”

Because of those capital requirements and the need for large numbers of customers, it’s more likely that new Virginia banks will form in high-population centers such as Northern Virginia than in underserved rural areas, says Bruce Whitehurst, president and CEO of the Virginia Bankers Association.

John Jordan, executive director of the Graduate School of Banking at Louisiana State University, started and ran a small-town community bank in Tennessee in the late 1990s.

While Jordan applauds McWilliams’ intention to spark the formation of new small community banks, he says that won’t happen without action from Congress to reform banking regulations significantly. Without reducing compliance costs and leveling the playing field, he says, small de novo banks won’t be able to afford to form in the communities where they’re most needed.

Asbury with Union Bankshares thinks that, while some new banks might emerge to serve underserved rural markets, the economics involved in that effort will be very challenging. It’s more likely, he says, that the new class of de novos will target niche businesses and will be built around new and emerging technologies.

Whitehurst agrees, saying it’s probable that newer bank startups will rely more on online banking services than physical branches.

“Geography means a little less than it used to,” given the rapid changes in technology and smart devices, Yeakel says. “Banks … are using technology to reach well beyond the geographic area of their hometown and their branches.”

Tech for b-schools

On a weekend in late October, a group of 12 Virginia Tech executive MBA graduate students in Falls Church were tasked with solving the nation’s infrastructure ills using artificial intelligence tools.

With the help of representatives from companies such as Microsoft, Qlik and Tableau Software, the students used machine learning software to analyze data and make recommendations on how to fix the aging infrastructure.

One student group, for example, analyzed dam hazard classifications based on a real-life database of dams in Vermont. Inspecting dams requires a lot of manpower and can be cost-prohibitive, says Barbara Hoopes, an associate professor of business information technology at Virginia Tech’s Northern Virginia Center. The students’ analysis produced a system to prioritize potential hazards first.

At Virginia Tech’s weekend executive MBA program, the goal of teaching with machine-learning or business-intelligence tools is “not necessarily to turn the students into … data scientists but into what you might call savvy consumers of data science,” says Hoopes. “If these MBA-level students are going to be out there as managers … we want them to know the power associated with machine learning and artificial intelligence and how they could use that most effectively within their organizations.”

As artificial-intelligence and machine-learning algorithms become more prevalent, these high-tech tools — once the domain of engineering and information technology students — increasingly are becoming part of the curriculum at Virginia’s business schools.

That trend takes the form of undergraduate degrees in business analytics and MBA programs that teach the concepts behind business applications for A.I. and advanced technologies such as neural nets and deep learning — advanced computing systems, loosely based on the human brain, that learn by example to complete complicated tasks and solve problems.

The College of William & Mary offers an undergraduate major in business analytics as well as a hands-on technical course that teaches students programming techniques to create machine-learning models. However, like Tech, William & Mary’s MBA program also teaches its graduates about A.I. and machine learning in the context of using the tools to make business decisions.

“The idea is that perhaps these students aren’t going to be rolling up their sleeves and spending 24 hours a day building detailed decision models, but they certainly will be either managing people that are doing that or, far more importantly, receiving the wisdom of people that are doing that and are using arguments that involve that kind of technology, so they’ve got to really become critical consumers of that, managerially,” says David Murray, a clinical associate professor of business operations at William & Mary’s Raymond A. Mason School of Business. “It’s somewhat less technical [than the undergrad degree] but somewhat more tactical.”

Virginia Commonwealth University offers two graduate programs in analytics, including a decision analytics degree for executive MBA students. “We define analytics to be the process of leveraging data to support business decision making. … That includes both traditional statistics as well as more advanced modeling techniques such as machine learning and data mining,” says Paul Brooks, an associate professor of supply chain management and analytics at the VCU School of Business.

VCU’s program, Brooks says, emphasizes how to take insights received from data analysis “and turn them into actionable intelligence that people use to make decisions.”

The use of machine-learning tools to analyze business data will become increasingly ubiquitous in various industries and already is being used extensively in marketing and social media, industries that are leading the way, Brooks says.

Also, says Cliff Ragsdale, Virginia Tech’s Bank of America Professor of Business Information Technology, “more and more companies are developing point-and-click kinds of software tools that bring the power of A.I. and machine learning to pretty much anybody who wants to use it. … Thirty years ago, if you wanted to do neural networks, you had to write code from scratch to do it.”

A.I. is commonly used these days to automate rote tasks that were previously the domain of human workers, such as processing call-center requests, Brooks says. But the future of A.I. is deep learning, an advanced type of machine learning in which a computer can process enormous amounts of information from unstructured data sources, such as video, images and texts, and learn with minimal guidance to discern behavioral patterns or recognize objects or individuals. While still in its infancy, deep learning technology could be used for everything from replacing customer service agents to allowing autonomous cars to recognize other vehicles and pedestrians and make split-second driving decisions.

As artificial intelligence inevitably eclipses human intelligence, that, too, is something that tomorrow’s business leaders will need to consider in grappling with future challenges posed by super-intelligent machines, says Anton Korinek. An associate professor of business administration at University of Virginia’s Darden School of Business, Korinek is teaching a class about A.I. and the future of work, including, he says, “what to expect in terms of future developments in our economy and how students can best prepare to face the world in which A.I. is going to take over larger and larger parts of our economy.”

Some experts, such as tech billionaire Elon Musk, warn that humanity is facing a coming “singularity,” a social upheaval caused by artificial super-intelligence. Musk goes as far as to say that A.I. has the potential to destroy the human race.

Korinek agrees that society is unprepared for the coming of hyper-intelligent A.I. but in the near term, he says, people need to contend with the notion that almost any job could be replaced by A.I. — even in creative fields.

“We really have to be prepared for the fact that ultimately a lot of the things that we thought were exclusively human activities and tasks will also be automated … in the coming decades,” he says.

“Not everybody needs to be a master programmer, but to be successful we need a rudimentary understanding of how A.I. works, a rudimentary understanding that ultimately no domain will be completely immune from advances in A.I., and it’s always the case that those who are frontrunners in employing new technologies will be the most successful,” he says.

Play ball?

This summer Fredericksburg government officials touted the news that the city had reached a deal to relocate the Potomac Nationals baseball team there by 2020. The team had been unable to reach a deal for financing assistance from Prince William County, where they have been based since 1984.

In November, the Fredericksburg City Council approved a development and shared-use agreement with the team, which expects to break ground on a 5,000-seat, $35 million stadium in early 2019. The stadium will be privately financed by the team, but the city will pay the team $1.05 million annually for 30 years to lease the facility. And the city’s guaranteed payments will help the team secure debt financing.

“It’s a pretty unique deal structure that we think serves the citizens of Fredericksburg while also bringing to town a significant new quality-of-life and entertainment amenity,” says Bill Freehling, the city’s director of economic development and tourism.

The deal is just one example of the part many cities play in financing the construction of stadiums and other venues for professional sports teams.

Boosters of such projects proclaim that stadiums are a worthy investment of taxpayer dollars because the facilities improve a community’s overall quality of life, bring in ancillary revenues and aid economic development efforts by making a community more attractive to prospective businesses and workers.

However, there are others — like a George Mason University economics expert who has studied the business of stadiums — who say that stadiums are at best boondoogles and at worst inappropriate beneficiaries of public funds.

“I like Minor League Baseball, and I like sports in general. I just think that we’d be able to enjoy it even more if taxpayers weren’t on the hook to subsidize the profits of wealthy businessmen,” says Michael D. Farren, a research fellow at George Mason University’s Mercatus Center, a public policy research center. Farren has studied the use of public financing for private sports venues and has written newspaper opinion pieces about several projects, including the proposed Fredericksburg stadium.

Fredericksburg expects to break even or come out ahead on the stadium deal, Freehling says. The city estimates that much of its $1.05 million payments will be offset by tax revenues from the stadium as well as $100,000 per year pledged by the proposed stadium developer. Additionally, the city expects to earn at least $250,000 per year by staging nonsporting events such as concerts at the stadium in the off-season.

Norfolk’s Harbor Park baseball stadium, which opened in 1993, was also built via a public-private partnership. The city government took out debt service for the $16 million stadium and received annual $1 million lease payments from the owners of the minor-league Norfolk Tides for 20 years to offset the city’s debt payments. The city received additional income from related tourism, meals taxes and parking revenues.

Harbor Park “became a great win-win for the [team] and the city,” says former Norfolk Mayor Paul Fraim, who helped put the city’s stadium deal together. “I think it’s been pretty much a model of a good public-private partnership in professional sports.”

With partnerships such as these, though, Farren says, taxpayers should question whether supporting a sports stadium is the best use of public funding. There is usually only a 20- to 30-year guarantee that the team will stay in a city, he says. And unlike supporting a nonprofit- or government-owned museum or park, the city’s money is subsidizing a for-profit venue that sells admission tickets.

“Government spending makes the most sense when it’s limited to something that’s actually providing a real public good and not a private good,” says Farren.

Another problem, he adds, is that local governments are limited in how much debt they can take on without damaging their bond ratings or finances. When a locality takes on debt service for a sports stadium, that obligation diminishes its ability to borrow money for other big capital projects such as building schools.

However, that dilemma doesn’t apply to Fredericksburg’s deal with the Potomac Nationals because the city isn’t taking on any debt. And because the city’s promised $1 million annual payments to the team are expected to be offset by taxes and stadium-related revenues, those payments would not count against the city’s borrowing power, Freehling says.

Paying for stadiums isn’t always a popular proposition with voters, no matter how much they enjoy sports, Farren says. A 2014 survey by Fairleigh Dickinson University’s PublicMind Poll found that 69 percent of Americans object to the use of taxpayer funds to finance pro sports stadiums, and 71 percent disagree with offering tax breaks to lure a team to a city.

Professional sports teams often pit state and local governments against one other to secure the best possible offers of public financing for their stadiums, Farren says. For instance, the Loudoun County-based Washington Redskins, which have said they want a new $1 billion stadium by 2027, have been talking with Virginia, Maryland and Washington, D.C., officials about potential public financing for the project.

There have been some discussions of a bipartisan interstate compact to prevent a bidding war by the three governments, but so far there’s been little political will for entering into such an agreement, Farren notes, even though he says there would be no net regional economic gain from moving the team from FedExField in Maryland to another spot in the greater D.C. metro area.

Richmond’s city government hailed the Washington Redskins in 2012, footing the cost for an $11 million training camp where the Redskins play three weeks each summer. The camp hasn’t brought in promised crowds and tourism. This year it was revealed that the city diverted $5 million from its school construction budget to help pay for the facility.

City Council members have said they’ll consider extending the Redskins’ lease for the facility, which expires in 2020, only if the $2.85 billion NFL football franchise steps up and takes over the facility’s remaining costs, which totaled about $8.6 million at the beginning of this year. Currently, in addition to the $750,000 per year the city government is obligated to repay in stadium debt over the next 15 years, the government also pays the Redskins $500,000 a year to train in Richmond. Government officials and residents have lambasted the deal, saying the money should be going to improving the city’s deteriorating schools and roads.

Richmond Mayor Levar Stoney, who was elected in 2016, has said if the Redskins elect to keep training in Richmond after 2020, the terms will be different and the city will not agree to continue making payments to the team. Stoney told Richmond television station WTVR this summer, “I just don’t think the city of Richmond should be providing a cash subsidy to one of the wealthiest [sports] franchises in all of the world.” As of October, the situation had not been publicly resolved and the city remained committed to canceling the Redskins’ lease.

The Redskins’ economic impact projections for the training camp were based on tourism estimates that failed to materialize, and it’s been difficult to measure its economic impact, says Richmond City Councilwoman Kimberly Gray, who questions whether the city has learned its lesson about investing in private sports ventures.

Her district includes the trendy, fast-growing Scott’s Addition district as well as The Diamond, the baseball stadium that is home to the city’s popular Minor League Baseball team, the Richmond Flying Squirrels. The Squirrels have long been asking the city to build a new stadium to replace the deteriorating Diamond, which was built in 1985.

In 2016 the Squirrels signed a memorandum of understanding with Virginia Commonwealth University and the city of Richmond, stating that the parties intended to partner in a proposal to build a $55 million stadium. The project would be funded largely by the Squirrels and VCU, which also would use the stadium. The city’s role in the project was unclear.

The city government, VCU and the Flying Squirrels’ management will not comment on the current status of the 2016 agreement, but local media reports have said the new stadium would likely be built on a nearby, state-owned 21.5-acre parcel currently occupied by the Virginia Department of Alcoholic Beverage Control (ABC). The department plans to move its headquarters and distribution warehouse to Hanover County.

Gray says that she and other council members have not been briefed on the status of the project, and she’s hesitant to vote in favor of putting any city taxpayer funds into a ballpark when the city has other pressing needs.

“I’m a believer in the unifying force of having a team like the Squirrels and the excitement and the memories that are created of taking your family out of the ballpark,” Gray says. “However, if it’s not paying the bills, it’s just not something that we can afford to add to our plate. If it’s not bringing in a positive revenue stream that’s going to offset the expense of having it, then it’s really hard to make that case [to pay for a stadium with city funds] when we’re not able to meet the basic needs of our citizens.”

Coworking spaces

Stephen Moegling could have worked from his Richmond home when he took a job last year with Minnesota health-care marketing agency, Hailey Sault.

But like a growing number of remote workers, Moegling decided to join a coworking office space. He pays a monthly fee to share a professional office environment with coworkers from a variety of businesses, ranging from small startups to nonprofits to global companies.

“I really like it because I still have a lot of that engagement with people in an office environment, which I think is just healthy, to have that small talk here and there at the water cooler,” says Moegling, who works out of an office at Gather, a Richmond coworking company with three area locations. “But when it’s time to really get down to work, I can … close the door to my office and do it.”

In recent years, the popularity of coworking spots has soared. The number of coworking spaces globally is expected to increase 16 percent annually through 2022, according to research sponsored by Global Coworking Unconference Conference (GCUC).

The trend also is reflected in Virginia. Chains such as New York-based WeWork and McLean-based MakeOffices offer flexible workspaces with a variety of amenities aimed at “gig economy” freelancers, consultants and independent contractors. Smaller coworking companies also are setting up shop around the state.

$250 to $500 a month
The largest local coworking space in Richmond, Gather was founded in 2014 and has more than 500 members who pay monthly fees ranging from $250 to more than $500 for 24/7 access to the facilities. Some just need an available cubicle; others pay for a dedicated desk or a suite of offices. Internet and utilities are included and members have access to conference rooms at any of the Gather locations.

For small businesses and startups, coworking offers considerable savings in time and money, says James Crenshaw, managing partner at Gather.

“Creating an office is its own workload and really [businesses would] much prefer to just be focusing on their core competency,” he says. “They didn’t get into their business to open an office, right? Whereas, that’s what we do. That’s our specialty. So they can focus on running their businesses and not have to worry about setting up an office.”

Jeweler finds new home
Since it opened in July 2017, Norfolk’s Percolator has opened four coworking spaces serving about 55 member companies, including David Nygaard Jewelers, whose namesake owner decided to close his longtime retail storefront in favor of working out of a Percolator office and seeing clients by appointment only.

“It has hyper-focused my business towards what I do best, which is the custom-design process, and it has lowered my expenses … because I’m not operating a retail store and retail space,” says Nygaard. Most of the foot traffic he had coming into his store was from people who wanted minor repairs or to have jewelry cleaned. In his first year switching to an office, his revenue has been nearly the same as previous years.

Percolator was founded to combat local “brain drain” by providing an attractive alternative to traditional workplaces and to build community and promote networking among entrepreneurs, says Jimmy Poplin, Percolator’s lead community manager.

The coworking space seeks “to harness the talent that we have right here in every industry from graphic design to art to music to film to wellness,” Poplin says.

“There’s so many people that are a part of the Percolator community and are just reaching out to help each other; it’s been really fun to watch this place grow.”

Working from home can be isolating, says John Dudley, owner of software development firm Industrial Imagination, who manages subcontractors working on projects around the globe. Being around other entrepreneurs at Percolator has sparked his creativity and inspired him.

“It actually inspires me in my own business. When I see, oh, they’ve just launched this, and they’ve just gotten this new client, it kind of makes me feel like I’ve got to keep up the momentum as well,” Dudley says. “If you’re sitting around your house, you’re not going to get any of that. You’re not going to necessarily feel the hot air that’s breathing down your back from potential competitors.”

Diverse backgrounds
Being around a community of people from different business backgrounds and experience levels can provide lots of opportunities for networking and learning, he says, likening it to “taking a master class in entrepreneurship.”

“I just love the diverse community of entrepreneurs [and] established business owners,” says Anastasiya Rogatnik, who runs her foreign-language instruction and translation business Lingo Rocket from a Gather location in Richmond. “If I need legal advice, I can go to a law firm next door. If I need help with my taxes, I can go to an accountant. … [I] just love the feeling of having different businesses literally next door to my office. If I have a question, I don’t even have to go outside of the building. I just have to walk down the hallway and get any assistance that I need.”

Amenities also are a key draw of coworking spaces, ranging from the open-bar, beer-on-tap provided by WeWork in some states to the gym memberships and podcast studio offered by Percolator or the fresh-baked cookies served on Wednesdays at Gather.

In February, Ali Greenberg opened The Broad, a coworking space in Richmond dedicated to building community and providing social experiences and coworking space for women and gender minorities. The Broad eschews desks and dedicated office spaces in favor of communal lounges with a modern design. Its 160 members include entrepreneurs and teleworkers who pay a $150 month-to-month fee, as well as “social” members who pay a reduced $75 month-to-month membership fee, which includes access to The Broad’s numerous perks.

“We do two weekly yoga classes … [and] we have office hours every single Friday with lawyers, accountants [and] personal finance professionals,” Greenberg says. “We get discounts at lots of local women-run businesses, and we put on a lot of our own programs that members all get free access to — everything from business-related stuff, like how to get an intern, to life stuff: travel … health and wellness, politics. It kind of runs the gamut.”

Scaling up or down
Coworking spaces are so popular that some larger landlords are looking at starting coworking businesses themselves in order to lease out their vacant buildings and large office spaces, says Jonathan Koes, a research manager with Cushman & Wakefield|Thalhimer.

There are risks inherent in operating a coworking space, including the up-front expenses for setting up the space. Additionally, relying on individual tenants to pay on a month-by-month basis isn’t as stable or secure as the traditional model of signing one corporate tenant to a long-term, three-year or five-year lease.

Ultimately, though, says Koes, “you’re going to command larger rents and get more dollars per square foot on an individual basis when you’re renting a desk versus an office.”

While the desire for community and opportunities to socialize and network are large components driving the growth of coworking spaces (“massive,” says Poplin), it’s also an affordable way for startups and small businesses to have professional workspaces and scale up (or down) as needed without expensive long-term lease commitments.

“I don’t need a conference room 24 hours a day; I don’t need a kitchen 24 hours a day. I only need fractional use of those spaces. And that’s what coworking allows you to do,” Dudley says. “It just seems to be a perfect model for a 21st-century company.”

A ‘killer arena’

NH District Corp., a group of corporate leaders headed by Dominion Energy CEO Thomas F. Farrell II, wants to reinvent a section of downtown Richmond with a $220 million arena as its centerpiece.

At the group’s planning sessions, one topic inevitably is discussed, and it has nothing to do with bond initiatives or blueprints: “It comes up in every meeting: This can take Beyoncé,” says Jeff Kelley, the group’s spokesman.

Major entertainment acts, such as Beyoncé’s, tend to skip the city because the drab, 47-year-old Richmond Coliseum can’t accommodate them, Kelley says, but “these acts [would be able to] stop in Richmond now. … They can stop right here and be in an amazing neighborhood in a killer arena.”

The city is considering NH District’s proposal for a $1.4 billion mixed-use, residential and business project in which a 17,500-seat arena would replace the 12,000-seat Coliseum. The entire project, built on city-owned real estate, would be funded via a mixture of publicly backed bonds, private investment and the creation of a special tax district.

Kelley says, “People ask, ‘Why do we need to have an arena?’ And, you know, I think our answer is: We deserve it. Richmond is becoming a world-class city, and world-class cities have amenities like this, and, in my personal view, I think it’s time. We’re due.”

The proposed redevelopment project is just the latest evidence of the Richmond area attempting to take a larger spot on the nation’s stage as a greater lure for corporate relocations and investment.

“Quality of life is becoming more important for companies in attracting talent to this region,” says Barry Matherly, president and CEO of the Greater Richmond Partnership. And as companies look at factors that would attract desirable millennial and Gen Z workers to the region, they are noting that Richmond lacks a facility for larger music and pro-sports events.

“In economic development, workforce is the No. 1 issue, and young professionals are the biggest concern of companies because that’s their current and future workforces,” Matherly says. “Areas that can attract and retain young professionals are going to be the most successful in bringing in businesses.”

The arena proposal would give Richmond the ability to create a new neighborhood from scratch.

“These are once in 30- to 40-year projects. And so the ability to shape an area with a major project with a coliseum … is what other cities are doing in venues that can be used for entertainment or concerts or sports,” Matherly says.

NH District’s proposal would transform a 21-acre, 10-block downtown area that, in addition to a new arena, would include a 527-room hotel, a bus transfer plaza, condominiums, 2,800 apartment units and 176,000 square feet of retail. The project also includes a $10 million renovation of the city-owned Blues Armory building, which may include a new food court. The neighborhood, which is surrounded by Virginia Commonwealth University Medical Center, the VA Bio+Tech Park and the J. Sargeant

Reynolds Community College downtown campus, now is virtually devoid of housing or retail.

The effort would “create a walkable urban center” and connect the city’s economically depressed East End with new employment opportunities, Kelley says. And, he adds, “If it goes forward, it will be the biggest minority-business opportunity in Richmond history. Somewhere around $170 million will be set aside for minority contractors.”

The plan would create a special tax increment-financing district around the arena. Tax revenues from the area would be used to cover debt service on bonds used to finance the public facilities in the project, including the new arena. Dominion has suggested that the district include its two downtown office towers a half mile away, one of which is under construction. The towers would generate an estimated $165 million in tax revenues during the next 30 years.

The Richmond City Council initially was expected to consider the NH District proposal in September. In mid-August, however, Richmond Mayor Levar Stoney told the Richmond Times-Dispatch the city still was negotiating with NH District on some key issues.

“We’ve made significant progress on several of the deal points that I’ve said are absolute must-haves for the city —especially on affordable housing and minority participation,” Stoney said in a statement. While there are “details to iron out before we take it to City Council,” the mayor said he remains “confident we will get this done.”

In its statement, NH District said it “will meet the Mayor’s vision and address Richmond’s need by delivering the community’s largest commitment to affordable housing, the largest level of minority participation Richmond has ever seen, thousands of jobs and training opportunities for Richmonders, and new tax revenue for core services.”

Rapid bus transit
Another way that Richmond is working to become more appealing to younger professionals, Matherly says, is with transportation projects such as the Greater Richmond Transit Co.’s recently launched Pulse rapid bus transit service. The Pulse runs for 7.6 miles along Richmond’s Broad Street corridor from Rocketts Landing in the east to the Willow Lawn shopping center near the Henrico County line in the west.

Combined with dedicated bike traffic lanes that the city has added downtown in recent years, the Pulse provides transportation alternatives to millennial and Gen Z workers who eschew driving and car ownership.

While the Pulse bus lanes and transit shelters were under construction, the project disrupted traffic, angering some local merchants whose shops became difficult to reach. Nonetheless, the new service appears to be a hit. In the first month after its launch in late June, Pulse had already exceeded its ridership expectations, says GRTC spokesperson Carrie Rose Pace. “We’ve done at least a thousand better than the goal every day,” she says.

Pace added that the GRTC expects an even more significant spike in ridership with VCU students returning to school in this fall. In a one-year pilot program, Virginia Commonwealth University is paying the transit system $1.2 million to allow VCU students and employees to ride GRTC buses for free.

Upgrades at river port, airport
Economic development opportunities for the region also have been aided by recent infrastructure upgrades to Richmond International Airport and the Port of Virginia’s Richmond Marine Terminal on the James River, Matherly says.

One recent business prospect, a maker of technical devices, was pleased to learn that Richmond offered the company an opportunity to receive raw materials by barge and to ship finished products out by air.

In September, Richmond International Airport began work on a $35 million extension of Concourse A, adding six gates to meet growing passenger demand. The project will increase the total number of gates at the airport to 28.

“Increasingly, RIC is seeing growing demand for overnight aircraft parking positions. Late-night arrivals become the next morning’s kick-off flights,” says Jon E. Mathiasen, president and CEO of the Capital Region Airport Commission. “While the airport can meet current requirements, the goal is to stay a bit ahead of the demand curve to meet foreseeable future needs.”

The airport is also planning a $4 million expansion of its Transportation Security Administration checkpoint at Concourse B. Expected to begin in October, the expansion will offer more room for increased flow of passengers at the airport. An expansion of the airport’s Concourse A security checkpoint is expected to follow.

“Facility expansion at Richmond International Airport is a reflection of the Richmond region’s growth,” Mathiasen says. “If the economy continues its current trends, I see nothing but growth ahead for RIC and the community it serves.”

In recent years, the Richmond Marine Terminal also has made a host of multimillion-dollar infrastructure improvements. The changes include a new harbor crane and an improved 409-foot river cargo barge equipped to carry refrigerated cargo.

The changes allow the port “to provide a more comprehensive level of barge service to current and potential customers and continue to serve as a catalyst for commerce in the Richmond metro area and beyond,” says John F. Reinhart, CEO and executive director of the Virginia Port Authority, which leases and operates the Richmond Marine Terminal.

In response to the terminal’s ability to handle more cargo, the Greater Richmond Partnership and area economic development officials have launched an export initiative. The goal is to have every cargo container arriving at the terminal bearing imported goods returned with exports from Virginia. “Every container that comes in here, we want something else from a Virginia or Richmond company to go back the other way,” Matherly says. “Trade is a two-way street.”

Construction boom
Driven in part by the upgrades to the Richmond Marine Terminal and by what some real estate industry analysts are calling a “golden age” of distribution warehouse construction, there is an explosion of commercial development along the Interstate 95 corridor around the river port.

“That wouldn’t be happening,” Matherly says, “if the port had not been upgrading and able to attract more volume.”

Newport Beach, Calif.-based Panattoni Development Co. is building a million square feet of speculative warehouse space on 62 acres.

And Richmond-based Hourigan Development is erecting 1.5 million square feet of high-bay warehouse buildings called Deepwater Industrial Park on the 110-acre Alleghany Warehouse Co. site near Philip Morris USA’s Richmond Manufacturing Center. Hourigan Development President Joseph Marchetti says the warehouse park “is a significant stride for economic development and the positioning of Richmond as a trade leader.”

Just a few years ago, Matherly notes, Richmond didn’t have any speculative warehouse space. Now warehouses are being built at a steady pace, spurred on by demand from internet businesses and developers’ confidence in Richmond’s strong, diverse economy. For example Richmond developer Devon USA, which last year built a 328,000-square-foot spec warehouse that became an Amazon distribution center in Hanover County, now is building a $20 million, 321,000-square-foot spec warehouse at the James River Logistics Center in Chesterfield County.

This year, Richmond’s industrial warehouse market is expected to expand its high-bay inventory by more than 2.7 million square feet, a 13 percent increase, according to CBRE.

All of these indicators point to a healthy economic outlook for the Richmond region, Matherly says.

But, he adds, the people planning new projects need to remember to keep one question in mind: “Is this going to help us keep the young professionals?”

Industrial boom

When Emser Tile began seeking a location for an East Coast distribution center, the Los Angeles-based company wanted two things: proximity to a port and the ability to quickly service a growing customer base.

In November 2017, Emser Tile opened a 407,000-square-foot distribution center at the CenterPoint Intermodal Center in Suffolk, which now employs more than 50 workers. It plans to add another 50 to 100 workers as business expands. The center, which has the capacity to expand to 850,000 square feet, ships products up and down the Eastern Seaboard as well as to the Midwest.

“It’s ramping up,” says Barbara Haaksma, Emser Tile’s vice president of marketing. Combining Virginia’s “favorable business climate” with the nearby Port of Virginia and its rail and interstate shipping access, “really made our decision pretty easy once it came down to pinpointing locations.”
Virginia’s industrial market is booming. Nationally and in Virginia, the growth of e-commerce is driving much of the momentum as online customers order more stuff that needs to be stored and delivered. In the race to shorten delivery times, retailers — both traditional and online — want distribution centers close to population centers.

Virginia’s central location on the Eastern Seaboard makes it competitive as a site for these centers along with improvements to Richmond’s port and the Port of Virginia in Hampton Roads. With more distribution and warehouse centers going up, industry analysts say, industrial vacancies are at historic lows in some parts of Virginia, and rents are trending up.

“We’ve had several years of record-low vacancies and a steady demand from tenants, so landlords, they’ve got a tremendous amount of confidence right now to move forward with spec development,” says Matt Anderson, a senior vice president and partner at CBRE’s Richmond office.

While Hampton and Southwest Virginia also are benefiting from the trend, the Richmond region has seen the largest amount of new construction and deal announcements from distribution and logistics operations statewide in the last couple years.

“Our industrial market is as healthy as it’s ever been,” says Graham Stoneburner, a senior associate in Cushman & Wakefield|Thalhimer’s Richmond office. “E-commerce has really driven the need for more warehouse space and distribution space.”

In fact, Richmond’s industrial warehouse market is currently undergoing a “golden age” in the distribution sector, according to a recent report from CBRE. It noted that during the first quarter, Richmond set post-recession highs in total construction, at 2.6 million square feet, as well as speculative construction at 918,438 square feet of high-bay warehouse and flex product. The current pipeline is expected to expand the high-bay inventory by more than 2.7 million square feet, a 13 percent increase.

For example, Newport Beach, Calif.-based Panattoni Development Co. is building 1 million square feet of speculative warehouse space on 62 acres near the Port of Virginia’s Richmond Marine Terminal along Interstate 95.

“That’s the largest spec warehouse to go up in the commonwealth ever,” says Anderson, Panattoni’s leasing broker. So far, he says, potential tenants looking at the site represent a variety of industries. The only thing they have in common is that they’re all “bulk warehouse users who need a large footprint in a good location.”

Demand for larger centers
Ever since Amazon began locating the first of its four warehouses and distribution facilities in the Richmond region in 2012, Anderson says: “We’ve seen this steady demand for these larger regional distribution centers. … We had always been more of a 20,000- to 50,000-square-foot-sized tenant industrial market.” But now, he says, there’s growing demand for properties in the 200,000-square-foot to 1-million-square-foot range.

Consequently, “You’ve got a tremendous pipeline of seasoned industrial developers who are bringing quality product to Richmond that we haven’t seen in years.”

Richmond-based Hourigan Development is building 1.5 million square feet of high-bay warehouse buildings called Deepwater Industrial Park on the 110-acre Alleghany Warehouse Co. site near Philip Morris USA’s Richmond Manufacturing Center on Interstate 95.

Richmond developer Devon USA, which last year built a 328,000-square-foot spec warehouse that became Amazon’s Hanover County distribution center, is now working on a $20 million, 321,000-square-foot spec warehouse at the James River Logistics Center in Chesterfield County.

Additionally, rents are going up on warehouse spaces with less than 100,000 square feet, Anderson says, because there’s less supply in that size range. “I think that’s going to create rent growth that will be healthy for the overall economy and gives more confidence to the larger institutional developers. It creates a more competitive landscape for the tenants who are here.”

In Southwest Virginia, a number of developers have industrial projects sprinkled up and down the Interstate 81 corridor from Blacksburg to Front Royal. “It’s a little more spread out, but it’s very active out there,” says David Williams, president and CEO at the Richmond office of global commercial real estate company Colliers International.

For example, health-drink manufacturer Humm Kombucha is building a $10 million, 100,000-square-foot brewery in Roanoke to make and distribute its refrigerated probiotic fermented tea beverage to retailers along the East Coast.

In Hampton Roads, the Port of Virginia has been working on $700 million in expansion projects to increase its cargo-handling capacity by 40 percent. That expansion has sparked projects such as a 284,580-square-foot spec warehouse built last year by Panattoni at Suffolk’s Virginia Regional Commerce Park. Welspun USA, the American arm of an Indian bath and bedding textiles maker, leased 200,000 square feet of the multitenant warehouse in October, just a few months after it was completed.

Nevertheless, the industrial real estate market in Hampton Roads has been stagnant compared with the development boom seen in Richmond, says Bill Throne, first vice president of industrial properties at Cushman & Wakefield|Thalhimer’s Hampton Roads office. A lot of the containers coming into the port’s Norfolk and Portsmouth terminals are immediately shipped out to other locations, he says, so there’s not as much need for additional warehousing space in the area, even though it’s almost all occupied.

“There’s not a lot of space out there. We’re under 5 percent vacancy,” Throne says. “We’re really lacking in both absorption and deal velocity. If you look historically, we’re doing OK. We’re not doing better than we have over the last eight or 10 years, and we’re not doing worse.”

Boost from economy
As for Richmond’s industrial real estate market, Stoneburner expects continued growth in construction and leasing as long as the economy remains vibrant and consumer spending continues accelerating.

“We’re in a good economy right now, and as businesses continue to grow and need to expand their footprint, they need to buy more things, ship more things. … And as people buy and sell more and as businesses grow, you’re going to see the industrial market continue to grow.”

Economic and cultural change

On the northeastern edge of Virginia Commonwealth University’s downtown Richmond campus stands a gleaming, seemingly impossibly angular, zinc- and glass-fronted building that is itself as much a piece of art as the works contained within it.

Named by Architectural Digest as one of its most anticipated buildings in 2018, VCU’s $41 million, three-story, 41,000-square-foot Institute for Contemporary Art (ICA) debuted in April to throngs of art lovers who toured its inaugural exhibit, “Declaration.”

A mélange of socially conscious works, the show ranged from abstractions and aural installations to Paul Rucker’s “Storm in the Time of Shelter,” a veritable army of 52 menacing mannequins bedecked in outré Ku Klux Klan robes stitched in a variety of gaudy fabrics from camouflage to plaid.

Among the ICA’s other new works on display is a pink neon sign on the outside of the building crafted by Bahamian artist Tavares Strachan. It reads simply, “You Belong Here.”

The message may prove to be prophetic.

“I’m convinced that there will be people who will fly into Richmond [to see the ICA] who would have never come to Richmond … because this is one of those spots that lights up on their world map now,” says VCU President Michael Rao.

VCU raised $37 million toward the construction of the Institute for Contemporary Arts.

The institute “adds to the reputation that Richmond, Va., and the region is a forward-looking, progressive business community,” says Richmond philanthropist William A. Royall Jr., who donated $5 million to VCU for the project with his wife, Pam.

Fifteen years ago, Royall says, when he was running Henrico County-based higher-education marketing company Royall & Co., it was very difficult to recruit creative workers from bigger markets like New York or Chicago. “Today,” he says, “Richmond’s a place where the folks in the creative class and younger people want to be. …

There’s a thriving arts community here. It’s very intelligent. It’s an exciting time to be in Richmond.”

The arts are a big business, generating tourism and tax dollars and driving serious philanthropic largesse. Arts and cultural organizations spark more than $360 million a year in economic activity in the Greater Richmond region, supporting more than 10,700 full-time-equivalent jobs, according to the Washington, D.C.-based nonprofit Americans for the Arts. More than $210 million of that amount is generated by the spending of nonprofit arts and cultural organizations in the region.

Statewide, the story is much the same. In Virginia Beach, the arts account for $87.7 million in economic activity and employ nearly 3,000 workers. Nonprofit arts and cultural groups generate more than $270 million a year in Fairfax County, supporting more than 6,200 full-time-equivalent jobs.

Nationally, arts and cultural economic activity accounted for 4.2 percent of gross domestic product, or about $763.6 billion, and employed more than 5 million Americans in 2015, the most recent year studied, according to the U.S. Department of Commerce’s Bureau of Economic Analysis.

Picasso exhibit
Richmond is enjoying a renaissance as an in-demand city for tourists, and much of that reputation was built on the arts, says Jack Berry, president and CEO of Richmond Region Tourism.

Virginia’s capital city has long had a reputation as a cultural center. Virginia Commonwealth University’s School of the Arts is the top-ranked public university art school in the nation, according to U.S. News & World Report. And the Virginia Museum of Fine Arts (VMFA) has long been a stellar example of a public art museum.

But in 2011 the VMFA scored a coup by landing an exhibit of Picasso masterpieces, making Richmond the only East Coast city to get the exhibit. And that, Berry says, “started this whole transformation in the psyche of us as a tourist destination. And arts are a huge part of this. … and now we’re as cool as Austin and as cool as Portland.”

In subsequent years, Richmond has been lauded as a top destination by Frommer’s, Travel & Leisure, Lonely Planet, TripAdvisor and many others. The Picasso exhibit, which cost a reported $5 million and relied on corporate, individual and foundation donations, attracted more than 250,000 visitors and generated almost $30 million, including related spending on dining, lodging and retail.

During the past decade the city also has morphed into a dining and breweries powerhouse, with 900 independent, non-chain restaurants and more than 30 craft breweries.

The city’s three-day Richmond Folk Festival every October typically draws about 200,000 people per year. And city officials recently announced that in 2020 Richmond will play host city to the international Menuhin Competition, billed as “The Olympics of the Violin.”

It used to be that Wednesday nights in Richmond were the highest occupancy night for hotels due to business travel. Now, on Saturday nights “you cannot find a hotel room in Richmond. And we have 18,000 rooms,” says Berry.

He recalls with amusement how one Richmond restaurateur was complaining to him that his local customers couldn’t get a table. “It was a fabulous problem,” Berry says. “His locals were getting pushed out and displaced because there are so many people from out of town coming in to see the exhibits.”

“Terracotta Army,” the VMFA’s recent traveling exhibit of archaeological treasures from the reign of the first emperor of China, drew more than 204,000 visitors and brought in about $3 million in ticket sales and museum gift shop purchases alone, along with $500,000 in new memberships.

“Someone told me friends of theirs from Dallas, Texas, have come twice, flying here just to see the [Terracotta Army] show,” VMFA Director Alex Nyerges says. “And obviously [museum tourists] stay in our hotels, they eat in our restaurants. They are adding to the economy in a material and direct way when we do these exhibitions. We are obviously creating an economic engine.”

The VMFA expects to draw a “huge crowd from throughout the mid-Atlantic and beyond,” Nyerges says, when it premieres an upcoming exhibit on the works of “Nighthawks” painter Edward Hopper. Perhaps in anticipation of those future crowds, the museum also is renovating and expanding the 19th-century Robinson House on its grounds into a regional tourism center and offices.

A ‘good investment’
According to the nonprofit group Virginians for the Arts, arts patrons in Virginia spend 34 cents more per dollar on arts-related tourism expenses than average tourists.

Ed Harvey is president of the group, which lobbies the legislature on behalf of the 680 arts, education and cultural organizations that receive financial support from the taxpayer-funded Virginia Commission for the Arts.

Giving to the arts, Harvey says, “grows our economy. It’s a good investment. There are a little over 17,000 businesses that are arts-related in Virginia and they employ 70,000 people. So the arts are a vital part of each community and do help the economy.”

Harvey also is president of The Arts Center in Orange, a small nonprofit community arts center that hosts local exhibits and educational programs for children and the elderly. He’s seen firsthand how this arts center, supported largely by individual local donors, has revitalized Orange, a town with a population of about 5,000. “For quite some time,” Harvey says, “it was the only business open on Saturday afternoons on Main Street. And since then a lot more things have opened up.”

The economic impact of a thriving destination arts venue on a small city can be seen in Staunton. There the American Shakespeare Center sells 65,000 tickets per year to its performances of the Bard of Avon’s works at its Blackfriars Playhouse, a re-creation of a 16th-century indoor theater in London.

Annual tourism expenditures in the picturesque Shenandoah Valley city have risen by 91 percent, or about $24.6 million since the $3.7 million Blackfriars Playhouse was erected in 2001.

“Arts in general and theater in particular are definitely an economic driver in downtown [Staunton],” says Amy Wratchford, managing director of the American Shakespeare Center. “The relationship between the theater and the city and the other arts organizations in the area is very strong. We do a lot of cross-marketing.”

Before the theater located there, Staunton was primarily known as the home of Mary Baldwin University and the birthplace of U.S. President Woodrow Wilson. The center was one of the things that attracted the Heifetz International Music Institute to Stuanton in 2012. Benjamin K. Roe, the institutue's president and CEO, says, “We considered several locations around the country, but ultimately chose Staunton …” Besides the theatre, he noted that both both Mary Baldwin and the city of Staunton “are pro-active in their understanding and promoting the economic benefit of a strong arts, cultural and foodie scene.”

In 2011, Baltimore magazine praised the city as a “foodie paradise.” Visiting theater patrons are just steps away from Zynodoa, a popular farm-to-table restaurant. They can also stop in for dinner at The Shack restaurant, which Esquire magazine raved about as “incredible.” It’s run by chef Ian Boden, twice nominated as a semi-finalist for the prestigious James Beard award for Best Mid-Atlantic Chef. Theatergoers also often stay overnight at the Stonewall Jackson Hotel or one of the city’s many bed and breakfasts.

The theater received fundraising support from Staunton-area residents when it was getting off the ground, Wratchford says, but these days its donations largely come from outside the community. For fiscal year 2015 donations made up nearly $600,000 of the center’s $3.4 million annual revenue, with ticket sales and other program-related revenues accounting for more than $2.7 million.

While it’s good that the playhouse can be self-sustaining, she says that it does need to do a better job of reminding local residents of the important role the theater has played as an economic and tourism driver in revitalizing Staunton.

“One of the conversations that’s happening a lot in the nonprofit theater industry is the fact that we need to get better at telling that story of what kind of economic impact we have,” Wratchford says.

Over the course of a year, the American Shakespeare Center directly employs about 100 workers and it also gets most of its materials, concessions and wine from the surrounding region. “We try as much as possible to be locally and state-centered so that the money we’re bringing in is going back into our community and the commonwealth.”

Wolf Trap
One hundred and forty miles northeast from Staunton in Fairfax County, Wolf Trap National Park for the Performing Arts attracts more than 400,000 patrons per year to see everything from rock bands to ballet and musical theater, mostly held amid the stunning natural setting of its open-air, fir-and-pine Filene Center amphitheater.

Wolf Trap has an annual economic impact of about $80 million in Fairfax County, including tax revenue and ancillary activities such as dining and lodging. “That translates to just under a thousand full-time equivalent jobs generated by the activity of Wolf Trap,” says Arvind Manocha, the president and CEO of the Wolf Trap Foundation for the Performing Arts.

About two-thirds of Wolf Trap’s visitors come from Virginia and most of the rest come from Washington, D.C., and Maryland. Out of the roughly 75 events held at the park each year, about 25 are sell-outs, bringing in about 7,000 concertgoers per event. (Grammy Award-winning singer/songwriter Sting sold out three consecutive nights of performances there last year.)

Wolf Trap Foundation employs about 80 full-time workers plus a fluctuating number of seasonal employees during its summer concert seasons. In 2015, charitable contributions made up $10.8 million of its $33.7 million annual budget, with $19.3 million coming from ticket sales and related income.

While Wolf Trap’s direct and indirect economic impact on Northern Virginia is significant, employers in the region also find it valuable because of the role it plays in helping to attract a well-educated workforce. Wolf Trap provides educational outreach programs that engage children in learning activities via the performing arts. The foundation’s corporate contributors include The Boeing Co. and Northrop Grumman Corp.

“Our early childhood program is very much focused on STEM education,” Manocha says. “Given the tech corridor and the contracting community and the defense industry in this area, there’s a keen awareness that STEM skills are going to be vitally important.”

Another driver of corporate philanthropy to Wolf Trap, he says, is the business community’s recognition that Wolf Trap is an excellent amenity that can be used when selling the region to prospective employees.

“When I talk to business leaders who are moving their companies out to Tysons, who are thinking about their workforce … they are very conscientious about what are going to be the levers that they can pull to make this [region] an attractive proposition,” says Manocha.

Rao, Virginia Commonwealth University’s president, agrees that the arts enjoy strong corporate support because of the way that artistic entities can enhance a region’s quality of life. It’s valuable for attracting in-demand millennials to the area workforce, as well as luring new students, faculty and researchers to VCU, he says.

Rao thinks that the ICA’s unique niche as a haven for cutting-edge new artists will significantly increase philanthropic giving for the arts at VCU. “I think people are going to want to make large investments in this because they recognize the difference that it will make not just at VCU … but certainly Richmond and, I think, the commonwealth,” Rao says.

Nyerges at the Virginia Museum of Fine Arts, points out that corporate financial underwriting for local arts is a sound investment in building the amenities desired by the workforces of Richmond’s Fortune 500 companies. Producing and presenting special exhibitions such as Terracotta Army is expensive and can only be accomplished through corporate, individual and foundation support. Major corporate contributors to the Virginia Museum of Fine Arts include Altria Group, Dominion Energy and WestRock Foundation.

“Altria has thousands of employees, and WestRock has thousands of employees,” Nyerges says. “The organizations that support the arts obviously are able to attract better talent to move to Richmond and then stay in Richmond and be happy they live here. So you know, it’s one of those gifts that keeps on giving.”

A tax reform question

Charitable giving by individuals, corporations, estates and foundations in the U.S. has reached all-time highs in recent years, but many nonprofits in Virginia are nervously watching for a possible decline in giving because of recently passed tax reforms.

The federal tax overhaul that President Trump signed into law in February will almost double the standard deduction for individuals and couples to $12,000 and $24,000, respectively. That means that far fewer people will itemize their deductions, including charitable contributions, when they file their 2018 tax returns next year.

“The tax law in all likelihood is going to put a damper on charitable giving by individuals — how much and to what extent, we don’t know, but we are going to find out,” says Eileen Ellsworth, president of the Oakton-based Community Foundation for Northern Virginia.

And at a time when the federal government is cutting back on grants to nonprofits, “It’s almost like a double punch,” Ellsworth says. “If the government dollars are receding, and the tax law is now discouraging charitable giving by individuals, you can understand the vise that this puts the nonprofit sector in. … To say it was discouraging that Congress passed a law that could put such a damper on individual charitable giving … is just the understatement of the year. I mean, it was shocking, frankly, shocking.”

Not everyone believes, however, that the tax overhaul will result in less charitable giving. Americans donated a record-high $390 billion to charities in 2016, according to Giving USA, a publication from Chicago-based Giving USA Foundation, which tracks trends in American philanthropy. And the 2017 figures, expected to be released in June, may exceed that.

In fact, “as people were preparing for tax reform, there were a lot of people that were making big year-end gifts … because they weren’t sure what was going to happen. So, the end of the year was very good” for charitable giving, says Keith Curtis, the immediate past chair of the Giving USA Foundation. He is the founder and president of The Curtis Group, a Virginia Beach-based fundraising consulting firm.

In addition to the doubling of the standard deduction, Congress also doubled the estate-tax exemption to $10 million. Some charitable-giving experts expect the tax code changes could reduce overall U.S. charitable giving by as much as 5 percent, Curtis says.

“So, you could see a drop,” he says. “On the other hand, what we know is that the economy really drives giving a lot. And, so, if people are feeling like they have some more money in their pockets, if the economy continues to be strong, they could really be more generous with their charitable giving.”

Hard to predict impact
Sherrie Armstrong, president and CEO of The Community Foundation Serving Richmond and Central Virginia, says it has benefited from “bequests where people had to give more money to charity through their estates after they passed away due to taxes on their family members.” The dramatic increase in the estate tax exemption, she says, could result in fewer bequests to the foundation. “But again, we’re not sure. We haven’t seen anything on that yet.”

Geoffrey G. Hemphill, a tax attorney with Norfolk-based Vandeventer Black LLP, says it’s far from clear what impact, if any, the tax overhaul will have. Not getting a tax benefit won’t stop his own charitable giving, Hemphill says, “and I suspect a lot of people are like that. I’m still going to give to my church, and I don’t care what the loss of a deduction is. … I always thought charity was a matter of the heart and not a matter of your personal wallet.”

Michele A.W. McKinnon, a partner with McGuireWoods in Richmond, chairs the law firm’s nonprofit and tax-exempt organizations industry team. She also thinks it’s premature to predict what effects the tax reforms will have.

For starters, a lot of people who give small donations to charities probably weren’t claiming those donations for deductions, she says. And millennials, she adds, don’t make charitable decisions based on taxes. “Younger generations are going to fund stuff because that’s what they believe in,” McKinnon says. “Look at crowdfunding and all that. That’s normally not deductible, and people are more than willing to contribute to what they believe in.”

As for wealthier donors making large contributions, Armstrong points out that they still will itemize because their deductions will total more than $24,000: “I’m not sure it’s going to affect their giving,” she says. “I’m not anticipating the change in giving there.”

McKinnon says that, in her experience, very few high net-worth donors “focus on the tax benefits. … High net-worth individuals are more interested in how to achieve a particular goal, and what they struggle with is finding an organization to help them, not taxes. That’s not what’s driving them. And I’ve seen that with my clients who give away lots of money — many of them can’t use the deduction because they’re maxed out.”

Data-collection initiative
Even though it’s far from certain what impact the new tax law will have on giving, nonprofits and foundations are watching the situation carefully and trying to be proactive.

The Community Foundation for Northern Virginia, for example, is launching a data-collection initiative called Give Northern Virginia to track charitable giving.

“We’ve invited every single nonprofit we all know in the region to join,” Ellsworth says, adding that the group will collect information on 2018 charitable giving each quarter and track the changes from the previous year.

Meanwhile, the United Way of Southwest Virginia has been reaching out to its biggest donors.

“I actually talked with one of our major supporters today, who is a personal individual donor but has also helped our organization secure some foundation gifts,” says Mary Anne Holbrook, the nonprofit’s director of community relations. The donor, who already had spoken with some other United Way backers, told her the tax changes won’t affect their giving decisions.

“Tax deductions are certainly on that spectrum of things that can influence a decision, particularly for those of a certain [financial] level,” Holbrook says. “But it’s always low on that list of motivating factors.”

After the 2008 recession, many foundations refocused their grants and community efforts to maximize their impact. As a result, they may be in a better position to weather any potential dips in giving caused by tax reform.

“Foundations are more careful … deploying the available philanthropic dollars that they have,” Ellsworth says. “They’re looking for matching partnerships” and focusing grants on initiatives that will have the biggest overall positive impact on their communities.

Armstrong says, “We’re always encouraging more collaboration [among community groups] and more focus on goals and aligning and working more closely together.”

High net-worth donors
Some nonprofit sectors also face far less danger of shrinking contributions. This group includes the beneficiaries of large philanthropic gifts from wealthy donors, such as college capital campaigns, Curtis points out.

“Keep in mind that 50 percent of all individual giving in this country comes from high net-worth individuals,” he says. “High net-worth individuals give a lot to arts and education, so arts and education probably won’t see quite the impact.”

Smaller nonprofits, however, rely on small donations. If middle-class donors cut back on donations because of the new standard deductions, those nonprofits might face the most peril, Curtis and others say.

Other factors that could change overall giving amounts include new trends in philanthropy such as “impact investing.” In that arrangement, high net-worth individuals make for-profit investments in ventures that benefit the community, such as a new grocery store in an urban “food desert,” McKinnon says.

Many wealthy philanthropists have begun to supplant their charitable giving with social impact investing, she says. If impact investing is encouraged by tax reform, it could hurt charities depending on traditional fundraising, McKinnon adds.

And because the standard deduction has raised the threshold for itemizing, some upper middle-class and high net-worth individuals may be more likely to take advantage of tax strategies such as bundling deductions or creating donor-advised funds, says Curtis.

Both strategies allow individuals to itemize on their taxes for a single year. Bundling involves giving more to a charity in a given year in order to get the donor’s giving above the standard deduction. The donor who bundles then may give far less or nothing to the same charity in the following tax year.

Donor-advised funds are a tax strategy in which a donor commits to give a certain amount to a charity over a defined period of years. The donor doesn’t have to give all of the money up front, but they can use it as a one-time itemized deduction on their taxes for a single tax year.

Curtis strongly recommends that people discuss such moves with a financial planner or tax adviser to see whether it would make sense for them.

On the whole, most of those watching the philanthropy landscape say we probably won’t know until 2019 or 2020 what effects, if any, the new tax changes will have on charitable giving.

“It’s really going to be interesting to see what happens in 2018 and going forward,” Curtis says. “Our hunch is that people will still want to support those nonprofits that they’ve given to because they believe in them, and they know they make their communities a better place. But we just don’t know that for sure.”

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byline: Richard Foster