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As we enter the “Season of Giving,” advancement professionals in educational institutions and other nonprofits are busy engaging alumni, friends, and supporters of their institutions. Many institutions utilize #GivingTuesday to boost their year-end giving and maximize fundraising goals. While the charitable giving landscape underwent a big shift as a result of the Tax Cuts and Jobs Act of 2017 (TCJA), it did not have a major effect on donor behavior, which can be seen in a new survey from Fidelity Charitable Giving, Adapting to Tax Reform.
Fidelity Charitable surveyed 475 high-net-worth donors who had itemized their tax deductions in two of the last three years to find out if taxpayers were adjusting their giving strategies as a result of TCJA. The survey reports that half of the respondents made at least one change in their charitable giving strategy due to various factors. Some of the key findings from the report are as follows:
Most individuals did not change the overall dollar amount they donated in response to tax reform and donated the same amount as they did in the previous year. This means that giving behavior is not solely influenced by tax reform. Nine percent of individuals who gave less in 2018 than in 2017 cited tax reform as a reason for the change.
There has been an increase in charitable giving by millennials in 2018. This may be due to income growth related to life stage, rather than tax reform.
Taxpayers who work with a financial advisor were more likely to increase their giving.
32 percent of individuals who gave more to charity in 2018 increased their giving as a result of requests from nonprofits.
50 percent of taxpayers reported making at least one change in their charitable giving strategy, such as contributing to a donor-advised fund, grouping several years of charitable gifts into a single year, or donating appreciated stock. 19 percent changed their giving levels because they lost other tax deductions, while 16 percent changed their giving levels because the standard deduction increased.
Lastly, 75 percent of taxpayers say that they will donate about the same in 2019. According to the survey, many tax payers were surprised at their tax outcomes in 2018 and did not do as well as they thought they would in the wake of TCJA. Tax payer should be aware of more advanced charitable tax strategies and should make tax efficient decisions to increase their benefits going forward.
Fundraising professionals should take tax reform into account when approaching donors for charitable donations, as it will continue to be one of the many factors that will influence giving. Fundraising strategies should be revised to ensure a low impact of TCJA on charitable giving. For instance, donors may be encouraged to give two or three years of charitable giving in a single year to maximize their tax benefit. Fundraisers should adapt or craft new strategies to approach donors while competing with other charities for fundraising dollars.
As always, please feel free to reach out to us with questions, comments or any assistance with prospect research!
In an article by Murad Bushnaq for NonProfitPro, Bushnaq outlines five strategies that help increase an organization's efficiency when soliciting donations, a process that doesn't have to be a daunting task. Bushnaq suggests optimizing the donation process for mobile devices, maintaining consistent branding across your website, telling meaningful stories through content, offering multiple ways to give, and promoting matching gifts to donors. Read how to implement these suggestions here.
If you have ever planned, implemented, or evaluated a campaign, Chris Brakenbury of The Ohio State University says it's likely that you have looked at a gift table. According to Brakenbury, gift tables assume that giving is binary--either a prospect makes a gift within their rating level, or they do not. In today's day and age, donors' giving behaviors don't fit easily into boxes. Therefore, it is necessary to reconsider how gift tables are being used in today's advancement offices. The Ohio State University's Office of Advancement examined the basic gift table and developed a powerful planning tool for their campaign that allowed them to track a key metric: prospect-to-dollars. Read the full article here.
A Donor Advised Fund (DAF) is a charitable giving vehicle administered by a public charity created to manage donations on behalf of organizations, families, or individuals, according to Michele Borucki of the Helen Brown Group. In this article, Borucki explains quick DAF facts, types of DAFs, types of contributions, a profile of DAF donors, and ways to attract DAF donors.
According to NonProfit Quarterly, the overall number of Americans giving to 501(c)(3)s continues to erode, while contributions from big donors with an adjusted gross income of $1 million or more has grown dramatically over the past decades. Patrick M. Rooney writes that this trend will continue, if not accelerate in the coming years. However, Rooney has ideas on what might be done to change this trend. Click here to read his in-depth look into the growth of big donors and the decrease of small donors.
Tracking donor behavior might be the key to expanding your nonprofit's ability to grow fundraising. BizTech encourages nonprofits to track these five need-to-know donor metrics: donor's contact preferences, gift size and frequency, donor's interests and passions, a donor's capacity to give, and a donor's activity within their organization. Read the full list and implementation ideas here.
