As nonprofit organizations look to end of tax year giving campaigns, whether an annual campaign or participating in an umbrella effort (e.g., “I live here, I give here”) it is prudent to take stock of donor giving history. Effects of the Tax Cuts and Jobs Act of 2017 are still being determined so each nonprofit needs to have the pulse of its donors; one-on-one conversations are more important than ever.
What did 2018 tax returns show us, after the cautions at the beginning of the year? Giving by individuals declined 3.4% in inflation-adjusted dollars to $292 billion, after four straight years of growing by at least 2.4%, according to the annual Giving USA report. The tax law pushed millions of upper-middle-class households from itemizing deductions into a larger standard deduction.
There are some revealing statistics among filers who itemized in 2018. The number of donors declined 4.5% and donations under $250 dropped by 4.4%. While donations between $250 and $1,000 also dropped, donations of at least $1,000 increased by 2.6%. The Giving USA study showed religious and educational groups experienced declines exceeding 3% in inflation-adjusted dollars while international and environmental groups saw increasing donations.
Some taxpayers may start bunching their donations in years when they are itemizing deductions, a strategy that many financial planners have recommended in light of the 2017 legislation. Thus, it is possible for a new pattern to emerge of donors giving approximately twice as much every other year (in conjunction with itemizing every other year). Knowing financial planners in your area is always sensible; this development adds urgency to making those connections.
Key takeaways for nonprofits planning final fundraising campaigns this year:
- Renew efforts to develop personal relationships with existing donors;
- Reach out to financial planners;
- Understand accounting options for accepting pledges;
- Revisit strategic planning to understand how larger gifts can be leveraged.