Right before Christmas, President Trump signed the Tax Cuts and Jobs Act, into law. If you are a non-profit, you must be wondering how it will impact your fundraising—and what to do about it. Let’s break it down into five factors (for a more in-depth look, read the full article here.
1. Uncertainty. The uncertainty that comes with major tax overhauls will lead many potential donors to reduce or eliminate their giving—many people won’t know how this law will affect them until they actually file their 2018 taxes in early 2019. That’s a long time to deal with doubt.
What you can do now: Create a community for your donors. Non-profits are perfectly positioned to give donors a place to belong and to bring together people who identify with your values, your work, and your mission.
2. Increased standard deduction. Thirty million taxpayers will no longer have to itemize to reduce their taxable income. Although surveys indicate that smaller-dollar donors don’t give because of a tax deduction, tax-deductibility can be a motivating factor to donate.
What you can do now: Illustrate to donors that you are increasing the benefit amount of their donation to cover the (real or not) increased tax-burden. And ask for larger donations—it may help taxpayers reach the threshold of needing to itemize, leading to a larger tax-deduction.
3. Lowered Estate Taxes. Far fewer estates will be subject to the levy — only 1,800 in 2018 compared to 5,000 under current law. The law is expected to sunset in 2025, so major donors are likely to make familial gifts now, rather than wait.
What you can do now: Don’t stop marketing your planned giving vehicles! Focus on the philanthropic benefits and the legacy donors are leaving. In addition, keep in mind charitable lead trusts, life insurance policies and donors who may not qualify for the estate tax exemption.
4. Increased use of alternative giving vehicles. While this didn’t change, making gifts from retirement accounts will certainly become more of a focus during year-end planning.
What you can do now: Increase your organization’s marketing of alternative vehicles, such as qualified charitable donations (QCDs) and Donor Advised Funds (DAFs). Prominently highlight DAFs on your website and make sure you have age appended to your database, so you can target donors who qualify for making QCDs from their retirement accounts.
5. Increased 2017 Year-End Giving. While giving will certainly increase next December, the “tax-deductibility” technique won’t be as effective. This year-end is probably not a barometer for next year-end.
What you can do now: Start the conversation about impact early in the year to prepare leadership. December 31, 2018 will be here before you know it—and your organization should have a marketing plan to tackle it.
No matter what you do, remember to make your organization a donor priority. This tax reform and its consequences could have a significant impact on your mission and who you serve. There has never been a more important time for increased funding.
(Note: This article is not intended for legal or accounting advice. Please check with the appropriate people in your organization to ensure you are in full compliance with the new law.)
Jessica Harrington is the president of The Harrington Agency. She can be reached at firstname.lastname@example.org.