Posts tagged ‘year end’

July 26, 2019

All You Need to Know about Decrease in Itemized Charitable Deductions

When it comes to philanthropic trends, recent media reports have left many fundraising professionals lost in the weeds and confused by misleading analysis. So, I’m going to give you the most important insights about individual giving that you need to know now along with three practical tips.

First, here’s some quick background. Overall, charitable giving reached an historic high in 2018 with $427.71 billion contributed, according to Giving USA 2019. Despite this great news, individual giving, excluding bequests, fell 1.1 percent to $292.02 billion. There are many reasons for the slight dip, which you can read about in one of my prior posts. One of the factors that may have played a role is the new tax code. With it, we saw a dramatic increase in the number of taxpayers taking the standard deduction and a drop in the number choosing to itemize their deductions.

That brings us to a big takeaway that almost no one is talking about:

The charitable tax-deduction is not a substitute for a solid case for support.

This was true prior to passage of the Tax Cut and Jobs Act; it’s even more true today. Before the new tax code went into effect, less than one-third of taxpayers itemized their returns, and less than one-quarter of taxpayers claimed a charitable tax-deduction. Now, only about 10 percent itemize and 8.5 percent claim a charitable deduction, according to the Tax Policy Center. To put things another way, for the majority of donors, tax issues were never a viable consideration when it came to charitable giving. Today, tax considerations are an issue for even fewer people.

This all means that the classic, but foolish, year-end appeals touting the tax benefit of giving before December 31 are even more irrelevant than ever. Furthermore, it means that the relevance of the idea of year-end giving itself has been diminished. If someone doesn’t need to do year-end tax planning, why would they need to wait until year-end to donate? The reality is most people can give at any time with the same effect on their finances.

In light of all of this, here are the three things you should do:

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January 15, 2019

Have You Done Something Stupid to Alienate Donors?

As 2018 drew to a close, my wife and I received a few good emails from nonprofit organizations. I even highlighted one of those in a recent blog post. Unfortunately, we received far more fundraising appeals that I can only describe as stupid.

The garbage email appeals simply mentioned that December 31 was fast approaching and, therefore, I should donate to that particular charity while there was still a chance to do so in 2018. Doing multiple count-down to year-end emails simply magnified the annoyance.

So, what’s the problem with that? Let me make it simple and clear:

The calendar is not a case for support!

Jack Silverstein, Vice President of Financial Development at the National Capital Region YMCA-YWCA (Ottawa, Canada), shares my frustration over this. He recently posted his views in “People Know When the End of the Year Is!!!” I encourage you to read it though it does contain a word some may find offensive.

Because I agree with Silverstein, I want to provide some highlights for you.

Your prospects and donors know when the year ends. They don’t need you to remind them. They’re not idiots.

With most charities engaged in year-end fundraising, people want to know why they should give to your nonprofit organization and why they should do so at the end of the year. The mere fact that it is year-end is not a reason. People can donate to any charity at year-end or, for that matter, at any time of year. You need to inspire them to give to your organization. In other words, you need to make a case for support.

A related mistake that charities frequently made was to highlight the tax-deductibility of donations. In the USA, some have estimated that as few as 10 percent of taxpayers will itemize. It’s only that small population that might be able to take advantage of the tax-deductibility of a contribution. However, even among that population, tax benefit is a low ranking reason why people donate. Furthermore, it’s no reason whatsoever why they should donate to your organization; after all, people can get the same tax benefit by donating to any qualified charity.

When charities send such terrible appeals, they are not being donor centered. Instead, Silverstein asserts:

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December 13, 2018

Will One Charity’s Surprising Year-End Email Make You Look Bad?

This week, I received a surprising email from a national charitable organization. The email was so unusual that I need to tell you about it.

Like you, I’m deluged by emails from charities that arrive from the days leading up to #GivingTuesday through December. Most of the messages are from nonprofit organizations that forgot about me all year except now that they want my money. Most care nothing about me. None offers to help me or be of service to me. Most of the emails are just terrible.

One awful email came with the subject line, “Welcome to [I’m deleting the name of the organization].” Sounds nice enough, right? There’s just one tiny problem. I’ve been a donor for decades and even did a tour of duty as a trustee of the large organization. Ugh!

Given the garbage in my email Inbox, I was a bit relieved when I received a remarkable email from the Charities Aid Foundation of America.

WARNING: The email is so wonderful that it just might make you and your organization look bad.

Look for yourself, then I’ll explain why this is a near-perfect email and why you should immediately do something similar before it’s too late:

[Note, the actual email formatting was a bit better than the image I was able to capture for you. Ah, technology!]

Let me explain why this email works so well.

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October 1, 2018

Here are 3 Simple Steps to Avoid a Year-End Appeal Disaster

We’re now in the fourth quarter of the calendar year. It’s that special time of year when most charitable giving happens. That’s due, in part, to the fact that charities are out in force soliciting contributions as the year nears a close.

While there are many things you can and should do, I’m going to keep it easy. I’m going to give you three simple steps (and a bunch of useful tips) that will help you avoid a year-end appeal disaster:

Step 1 – Make a Year-End Appeal: You should test doing a beginning-of-the-year appeal in January/February since tax-avoidance is less of an issue for more people under the new tax code (see my post about this by clicking here). However, the fourth-quarter season-of-giving certainly remains the traditional time to ask for support. So, unless you have data for your organization that suggests otherwise, make sure you have a year-end appeal. The surest way to have a disastrous year-end fundraising appeal is not to have one.

As you plan your appeal, be sure to segment your prospect file. Treating your prospects as one homogeneous group may make your job easier, but it won’t help you keep your job. You’ll achieve much better results if you segment your prospect pool and target each segment with a tailored appeal.

For example, your message to existing donors will be different from your message to acquisition prospects. For starters, you’ll want to thank existing donors for their support before asking for another gift. Other segments might include monthly donors (You do have a monthly-donor program, right?), volunteers, past service recipients, event participants, etc.

In addition to tailoring your message to each segment, be sure to customize the ask. It’s inappropriate to ask an acquisition prospect for $1,000. Conversely, it’s also inappropriate to ask a $500 donor for $50. Just as bad, it’s a horrible mistake to not ask for a specific dollar amount or not to ask at all.

Step 2 – Have a Solid Case for Support: If you want people to give money to your organization, you need to make a compelling case for support. This is particularly true at this time of year when virtually every other nonprofit organization is out there looking for donations, too. Why should people respond to your direct-mail appeal (or phone solicitation, or face-to-face ask, etc.) instead of the appeal from another organization, perhaps one with a similar mission to yours? Address that question, and you’ll have greater success.

A strong case for support is particularly important when appealing to folks who have already contributed this year. They’ll want to know how you spent their money, the impact they have already had, and why you need more. Tell them those things, and you’ll increase the chance of getting another gift.

In addition to having a solid case for support, you’ll want to create some urgency. Why should people give to your organization now? If you’re the Salvation Army, people automatically get why you’re asking around holiday time. For pretty much any other organization, you’ll have to give prospects a good reason. And if that reason magnifies the impact that the donor’s gift will have, so much the better.

For example, you can have a challenge grant that matches all gifts received through the end of the year. Or, you could have the cost of your appeal underwritten by a major donor so you can legitimately tell prospective donors that 100 percent of their contributions to the appeal will go toward mission fulfillment. Both of these ideas will create urgency while magnifying the impact your donors can have.

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August 29, 2018

Surprise! You’re Most Likely Part of the Top One Percent.

As you begin to make plans for year-end appeals, let’s spend a few moments considering the idea of entitlement. I’m talking about the idea that wealthy individuals and corporations should, perhaps must, “give back” simply because they have a lot of money.

Do you think the top one percent income earners should pay higher taxes? Do you think they should donate more money to charity?

You might feel a bit differently after I share some news with you. If you earn at least $32,400 a year (or approximately 30,250 Euros, 2 million Indian Rupees, or 223,000 Chinese Yuan), you are part of the top one percent of income earners in the world, according to a new report in Investopedia. If you’re reading this post, I’ll bet the odds are that you’re a one-percenter. Congratulations!

So, as a global one-percenter, do you feel under-taxed? Do you feel cheap and that you don’t contribute enough to charities, particularly global non-governmental organizations? Should fundraising professionals in the USA and around the world expect, perhaps even demand, that you donate more? Should they shame you for not giving enough? Are charities entitled to more of your money just because you’re a one-percenter?

You might think so. I do not.

I believe that charities must behave ethically, provide great services, develop a meaningful case for support, and inspire people, foundations, and corporations to give. Charities must partner with donors, report to them, engage them. Simply thinking that the rich, or anyone for that matter, should do more is not going to get the job done.

I want to share a bizarre story with you that would be funny if it were not true. It’s about fundraising for a wedding. It nicely illustrates my point regarding the failure of an entitlement mindset.

Susan and her fiancé were childhood sweethearts. The couple worked on her family’s farm before attending community college. Then, they went to work to “become financially stable.” The couple continued working hard and eventually saved $15,000 for a wedding. Unfortunately, that wasn’t enough money for the “extravagant blow-out wedding” Susan wanted in order to properly celebrate their “fairy-tale” relationship.

Susan figured her ideal wedding would cost $60,000. So, she decided to look for financial help. She says, “All we asked was for a little help from our friends and family to make it happen.” Specifically, the-bride-to-be sought cash gifts. “How could we have our wedding that we dreamed of without proper funding? We’d sacrificed so much and only asked each guest for around $1,500.” As Fox News reported, Susan also said she “made it clear. If you couldn’t contribute, you weren’t invited to our exclusive wedding. It’s a once and a lifetime [sic] party.”

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December 8, 2017

5 Mistakes that Could Cost You Year-End Donations

As year-end approaches, you are probably working feverishly to raise as much money as possible for your nonprofit organization. Unfortunately, you might be making some mistakes that could cost your charity enormous sums of potential donations.

Here are just five common ways you might unknowingly short-change your organization at this special time of year:

1.  Appeals by the Numbers.

Many of the year-end appeals that I receive focus on numbers. Often, the number is “31,” as in December 31. Other numbers tout the volume of people served or the amount of a challenge grant. As I wrote last week, numbers can tell part of an organization’s story; however, numbers can’t tell the full story.

For the most effective appeals, you will want to engage hearts and minds. While some numbers can be meaningful, telling an individual story makes your nonprofit’s work more relatable and easier to understand. Individual stories are also far more likely to engender an emotional response.

The Wounded Warrior Project is a great example of what I mean. The organization could tell us how many veterans suffer from PTSD and medical issues. The charity could simply tell us how many veterans they serve each year. Instead, the Wounded Warrior Project tells the story of a single veteran. The organization’s television appeals are mini-movies that tell us of a veteran’s war experience, the problem he or she came home with, and how the Wounded Warrior Project is improving the veteran’s life. You can watch one of the organization’s television spots by clicking here.

2.  Not Asking for Gifts of Stock and Other Planned Gifts.

If you want to maximize year-end giving, you must seek planned gifts. Planned giving allows donors to make more gifts and larger gifts than they might otherwise be able to do simply from their checkbook. This is great news for your charity. Even better news is that not all planned gifts are deferred gifts. Here are some types of planned gifts that will result in immediate cash for your organization:

Gifts of Stock. With the stock market in record territory, many Americans own appreciated securities. By contributing stock shares to your organization, a donor can make a generous gift, realize a charitable gift deduction, and avoid capital gains tax.

Gifts of Appreciated Property. As with stock, many individuals own appreciated real December 31st by TransGriot via Flickrestate, art, and collectibles that they can donate. Your organization can either use the item for mission fulfillment (i.e., a museum can accept a work of art for its collection), or the organization can sell the item and put the cash to good use. You’ll just need to be clear with your donor about which option you intend to exercise.

Gifts from Donor Advised Funds. An increasing number of Americans have established a DAF. Be sure to remind your donors that they can advise that a gift be made to your charity from their DAF account.

IRA Charitable Rollover. Since the U.S. Congress has made the IRA Charitable Rollover permanent, individuals who are age 70.5 or older can donate up to $100,000 from their IRA each year without having to recognize it as income.

Year-end is also a good time to ask for deferred planned gifts such as Gifts in a Will, Beneficiary Designations, and Trusts.

You can read more about planned giving options by clicking here.

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February 5, 2016

It’s Not Too Late to Think about Year-End Giving

No, the headline does not contain a typo. It’s not too late to think about your 2015 year-end giving. It’s also not too early to begin planning for your 2016 year-end appeal strategy. Let me tell you why.

Only about one-third of tax filers itemize on their tax returns. Therefore, year-end giving for tax avoidance is simply not that important to the majority of donors. Furthermore, survey after survey indicates that tax avoidance is a very low motivating factor for most donors. So, why put a tremendous amount of energy and resources into doing a year-end fundraising campaign? Here are some of the rationales:

Herd Mentality. The fourth quarter of the calendar year is a busy time for charity appeals. The largest number of direct mail appeals is sent at that time. For phone fundraising, it is also the busiest time of year. So, since everyone else is doing it, fundraisers think they should be out there, too. #GivingTuesday helps perpetuate this mentality.

Heaping Pile of Mail by Charles Williams via FlickrIt’s the Right Time. For some charities, doing a year-end campaign around the holidays is appropriate given the mission and/or history of the organization. Consider The Salvation Army and its red-kettle campaign, or the Toy-for-Tots effort geared to providing holiday presents for children. For other organizations, donors are simply accustomed to seeing and responding to a year-end appeal.

Year-End is a Time of Giving. With Hanukah and Christmas falling at year-end, there is certainly a giving spirit leading into the end of the year. Charities hope to piggyback on that giving spirit.

Charities Simply Must Appeal at Year-End. This relates to the first two reasons above. Fundraisers think they have to do a year-end appeal because it’s the thing to do or because the organization has always done one. Without giving it much thought, fundraisers conclude that a year-end appeal is simply something that is best practice.

Despite the conventional wisdom, doing a year-end appeal might actually short-change your organization. There might be a more effective way for you to raise money.

I’ve worked with charities that have tested a year-end appeal against a beginning-of-the-year campaign. Many of these charities found they could raise far more money in January and February instead of at year-end.

Why did those charities raise more money at the beginning of the year rather than at the end of it?

Interestingly, the reasons can be found when taking a closer look at the reasons I’ve outlined for year-end giving:

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October 9, 2015

Do Not Make This Year-End #Fundraising Mistake

The fourth quarter of the calendar year is a popular time for charities to send out fundraising appeals. As a result, nonprofit organizations raise a lot of money during the fourth quarter. In addition, many nonprofit organizations host galas in the fourth quarter. Love it or hate it, #GivingTuesday is in the midst of the holiday season.

‘Tis the season to fundraise.

If you doubt that, just Google “year-end fundraising.” You’ll get over 20 million results!

Unfortunately, despite all of the terrific how-to articles, blog posts, books, webinars, and seminars, most nonprofit organizations continue to make a massive year-end fundraising mistake:

They overlook planned giving.

When developing a year-end fundraising strategy, most charities fail to include planned giving for a variety of reasons including:

  1. They don’t have a planned giving program.
  2. They think all planned gifts are deferred.
  3. They think that planned gifts are not time-of-year sensitive.

Let’s take a moment to look at the above reasons more closely.

Keep Calm - Management Center Mugs by Howard Lake via FlickrIf your charity does not have a planned giving program, it probably should, assuming you have individual donors. The effort does not need to be elaborate or fancy. The most common planned gift is the simple Charitable Bequest through the donor’s will.

While Bequests are the most common type of planned gift, not all planned gifts are deferred. Don’t over think it. Planned gifts are simply any gift that requires planning. Here are some examples of planned gifts that result in current, rather than deferred, giving:

Gifts of appreciated stock or property (i.e.: real estate, art, collectibles, etc.):

When a donor makes a gift of appreciated stock or personal property, she can avoid capital gains tax and receive a charitable gift deduction. Sadly, many fundraising professionals believe that individuals with appreciated stock or property somehow already know about the advantages of gifting such assets. However, that’s not always the case. Consider this true story from my book, Donor-Centered Planned Gift Marketing:

A member of the board of a scholarship foundation was approached at a cultivation event by a modest donor who wanted to give a $5,000 cash gift. The board member thanked the donor but asked, ‘Do you own any appreciated stock?’ The donor was a bit puzzled by the question, but replied, ‘Yes, I do. Why do you ask?’ The board member then explained that if the donor contributed appreciated stock valued at $5,000, rather than cash, she could avoid the capital gains tax, thereby resulting in a savings. The donor replied, ‘I can avoid giving my money to the government, by giving the foundation stock? That’s a great idea! And, since I really don’t need the money, why don’t I just increase my gift by the amount I’ll save in taxes?’ She did exactly that. However, her generosity did not end there. She was so moved by the work of the foundation and the good advice she had received that allowed her to avoid some capital gains tax that she consulted with her family and her advisors eventually giving over $15,000 to create a namesake scholarship fund.”

Since over half of all Americans own stock (Gallup, 2015), it’s very likely that some of your donors are in a position to donate appreciated securities to your organization. They just need to understand how they can benefit and what the mechanics are.

Gifts from a Donor Advised Fund:

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