Our Ask An Expert series features real questions answered by Claire Axelrad, J.D., CFRE, our very own Fundraising Coach, also known as Charity Clairity.
Today’s question comes from a nonprofit employee who wants advice on best practices around sharing tax information with donors.
Dear Charity Clairity,
First, I’m not really comfortable with the way we inform donors of the tax-deductibility of their gifts. It seems awkward and formal and not in keeping with the warm thank you letters we like to provide. Could we just leave it off?
Second, I’m even less comfortable talking about potentially tax-beneficial ways of year-end giving. I hear a lot about IRA rollovers and stock gifts, but we don’t really receive those. Are we missing out by not sharing information about these opportunities? Should I be doing or saying something different?
– Not a Tax Lawyer
Dear Not a Tax Lawyer,
While it’s not your job to be your donor’s financial or legal advisor, it is your job to be their philanthropy facilitator. You don’t need to be a tax lawyer to do this job effectively.
In fact, there are a number of simple things you can do to alert donors to the tax benefits that come from donating to your nonprofit or the ways they may be able to make gifts that are larger than they may have thought possible, simply by taking into consideration potential benefits of which they may not be aware.
If you can help your donor save on income taxes, capital gains, or estate taxes, this puts you in a helpful role, and you should never feel uncomfortable about making giving easy and painless for your donors.
Include information about tax-beneficial giving in your appeals and other marketing materials.
Make sure this information is on the giving pages of your website. This may include landing pages as well as donation forms. You also should include links to this information in digital and written appeals.
Finally, consider writing about tax-beneficial giving in one or more of your newsletters between now and the end of the year.
Here are a few examples of how other nonprofits shared this information with their potential donors:
- Jewish Federation of Cleveland
- Jewish Federation of Greater Kansas City
- Catholic Charities of Des Moines
- Catholic Charities Galveston-Houston
- Community Foundation of Western Nevada
- Kansas City Symphony
- St. Jude Children’s Research Hospital
Suggest tax-beneficial giving alternatives when speaking with major donor prospects.
Once the gift is closed, why not ask the donor how they’d like to make the gift? Do they want to give you cash? What about making a donation through appreciated securities, an IRA rollover, or a donor-advised fund? Let them know your understanding of the benefits of these various disbursement strategies.
Always include a disclaimer.
Remind folks in your communications that your nonprofit doesn’t offer professional legal or financial advice and that you recommended that they consult with their personal advisors. Make it clear that you’re offering suggestions for informational purposes only and to ensure that they’re receiving the most accurate, up-to-date information possible.
Finally, when you share this information, give your donors the name and contact information for someone on your staff who they can connect with should they have questions about the information you’re sharing.
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