The very end of any calendar year, as well as the beginning of a new year often conjures up the subjects of year-end giving to charity and preparing for tax season.
This is even truer, as we kick off 2018, because the Congress of the United States passed significant changes to all of our tax laws. This will cause major debate among individuals affiliated with the philanthropy processes occurring within our charitable sector.
Doubling of the Standard Deduction
This blog post is going to focus on the most widely discussed aspect of the various changes made. This, of course, is the movement of the standard deduction up to $24,000 per year for couples filing and $12,000 per year for individuals.
The discussion is centering on the much larger number of donors who will not be eligible for taking charitable deductions.
The concern is that the charitable deduction is a key driver or motivation for giving.
I, for one, hope that is not the case – especially for any nonprofit organization’s above average giving.
To apply such logic, one could speculate a key reason for investing in the stock market is to ensure there are losses to apply to one’s taxes as deductions to. Nothing could be further from the truth!
Uncovering True Donor Intent by Strong Relationship Building
The essence of this post is to help fundraisers understand the largest single factor in the mind of a high percentage of donors making gifts. This factor is:
The Desire to Make A Difference Within the Scope of Your Mission
Speaking from the viewpoint of a major donor personally, as well as having discussed this issue with a large number other major donors, the desire to make a difference is the key! Any associated tax deduction benefits were secondary, if not further down the ladder.
Now that we have the above key concept established, let’s see what can be done to enhance the entire philanthropic process from both the donor’s and the charity’s view point.
Relationship Building is the Key to Enhancing Donor Intent!
Only by better knowing and understanding each donor can a fundraiser enhance the desire to make a difference. By knowing and applying such key concepts, such as what aspects of your mission appeal most to the donor, you can introduce projects that excite them.
This will not happen, in most cases, without personal interaction of some nature accompanied by meticulous record keeping and segmentation of future communication.
This type of segmented communication and relationship building is difficult at best when the relationship is limited to direct appeals of one nature or another void of any personal emails, phone calls, and/or visits.
Such personalization can often begin by either attendance at a special event or by the donor responding to an initial survey. Both of these can spawn the personal discussions that uncover special interests and the corresponding desire to make an impact.
Please think for a moment where your volunteer actions or charitable giving made a difference in a cause you cared deeply about. Would you have not given or become further involved if there was not a charitable deduction?
If you are like myself and the other donors delighted to make an impact to a cause the doubling of the charitable deduction will have little influence. For those donors making modest donations to just one to three charities, which is the vast majority of donors, the doubling of the standard deduction may be more of a deduction then they have had in all of the previous years under the prior tax laws!
Finally, any aspect of donor relationship building introduces so many other benefits such as increases in annual giving, the desire to give to capital projects and for the donor to consider legacy giving.
Perhaps this new tax provision can be your organization’s stimulus to move beyond transactional giving into relational philanthropy…