The tax benefits for Americans who give to your nonprofit or ministry are broad and substantial, despite the recent tax reform. Here’s the part of the story you’re just not hearing about from the major outlets.
It’s impossible to be involved in any way at all in the nonprofit community without hearing about the recent Tax Cuts and Jobs Act of 2017. Of course, these tax changes affect all kinds of corporations, but the standard deduction increase for middle Americans, in particular, has fundraising pundits wringing their hands nervously.
The concern boils down to this: If the average American’s standard deduction is raised, then the incentive for charitable giving is reduced because they can receive the same tax benefit without giving to charity at all.
The fear of a decrease in charitable giving was echoed in a recent Guidestar article.
It’s been speculated that this giving cohort may be less philanthropic this year, and in future years, due to the increased standard deduction (therefore less incentive to itemize their deductions).
In light of their concerns that middle-income Americans might be “less philanthropic this year,” they give the following advice:
- Ramp up “efforts around low-level donors through direct mail and annual appeals… and major gift prospects…”
- Ramp up direct mail and other annual appeals.
- Ask your current corporate donors how the new tax law is impacting their future giving decisions—and create a strategy around their answers. Is there an opportunity to ask for an increased annual gift, an event sponsorship, or to pursue that donor who declined in the past?
- Reevaluate your relationships with your foundation donors—they may now be in a position to give more. Reconnect with your contacts and make your case as to why your organization needs their long-term support.
- Build relationships with donors and emphasize your mission rather than tax benefits.
There are commendable ideas here like emphasizing your mission to donors rather than tax benefits (because that’s the real reason they give anyway) and reconnecting (listening) to your donors. Those are solid pieces of advice we should always be following.
But this whole idea of pushing harder for annual gifts is like trying to stop a train by running faster towards it. No matter how fast you run, you’ll never have enough power to stop the train.
Throwing more money into your cash-based giving fundraising (like annual gifts, major gifts, and corporate annual gifts and sponsorships) simply cannot solve this problem.
It’s time to get off the tracks and try something new.
Changing Times Require Changing Methods
The popular saying, “Insanity is doing the same thing over and over while expecting a different result” really fits here. The article warns us that things are changing in philanthropy—and then advises us to do more of the same thing!
TO BE CLEAR: I am not saying that you should ditch your annual fundraising strategies altogether, whether we’re talking about mid-level givers, corporate donors, or major givers.
But I am saying we need to expand the conversation to fit other solutions to the problem.
Expand Your View of What a Gift Can Be
The bad advice to aim your fundraising efforts at entry-level givers and major givers (thereby cutting out mid-level givers who’re likely to not give as much this year because of the tax changes) focuses on CASH gifts and ignores the fact that higher capital gains taxes will actually be a great motivator to those who can give appreciated ASSETS.
If cash-based gifts were the only (or even “the best”) kinds of gifts your organization could receive, then this might be good advice. But if you expand your view of gifts to include asset-based gifts, you have more chances of surviving the volatile winds of change.Don’t work harder for cash–Work harder at diversifying the kinds of gifts your #nonprofit actively cultivates. Click To Tweet
Don’t work harder for cash. Work harder at diversifying the kinds of gifts your nonprofit actively cultivates.
Rethink Your View of Direct Mail
The advice to ramp up your direct mail efforts is flawed: Direct mail appeals are declining in effectiveness. And they’ve been in decline way before the new tax bill.
Again, I’m not saying that you should cut out direct mail from your fundraising efforts.
I am saying that you should rethink what you’re saying and trying to accomplish in your direct mail appeals. Just spending more money on doing direct mail the same way is not going to help.Spending more money on doing #directmail the same old way is not going to help. Tell better stories. Click To Tweet
Instead, “ramp up” your storytelling!
If you are going to stand out in the crowd of 1.5 million nonprofits, you’ve got to tell your donor how you’re changing lives—not inundate them with more junk mail.
Increase Your Value to Corporate Donors
Pursuing corporate donors is a good idea—but try and consider an entirely new spin on the corporate donation equation.
Traditionally, corporate fundraising has always been about showing businesses how they can effectively build their brands by giving to your nonprofit. Your nonprofit’s value for them is basically that you’re a marketing opportunity for them.
But what if you could be more than a brand-building opportunity?
By developing ways to surface corporate donors who are selling closely-held businesses or assets, you can help them save large sums of money in capital gains taxes.
No matter how your corporate donors are affected by the tax changes, they are still able to decrease their tax liabilities by giving to your nonprofit—so use this to your advantage!
Do Relationships Differently
Building relationships with your donors is always important, but too many times, nonprofits get into a rut in their donor relationships. Like corporate donors, you can increase the value you bring to your individual donors through asset-based giving.
The most effective way to add to the benefits donors receive by engaging with you is to introduce them to a safe and trusted third party who serves your donors by guiding them to solutions no-one else is talking about.
Your most impactful donors are unlikely to share the kind of information you need to know in order to mobilize massive gifts.
But with a safe third-party generosity consultant, like The Giving Crowd, you can help your donors discover the best ways for them to pay less in taxes while giving more to the causes they care about.
Expand Your Horizons
There’s more to philanthropy than annual cash-based gifts. By expanding your view of what a gift is, and how asset-based giving can serve your donor’s best interests, you can save your organization from the high’s and low’s of the new tax bill.
For hands-on assistance in moving your nonprofit towards a holistic, asset-based approach to fundraising, let’s talk!