As we begin the fourth quarter of 2018 I am curious. If you manage a church or other nonprofit, are your donations as high as last year? With the new tax law there were many changes, but the one effecting nonprofits the most may be the increase in the standard deduction. If a married couple is making $40,000 a year, they can instantly deduct over half ($24,000) from their taxable income. The odds are they will no longer need to take the time to itemize their deductions, so the benefits of a “tax-deductible contribution” may not be as attractive to donors.
I recently read an article that said overall donations in the USA were down through the first three quarters of 2018 and part of the theory was because of the increased standard deduction. Before becoming a financial planner, I managed a wheelchair hockey program, so I understand the struggles of fundraising. There are 1.5 million nonprofits in the USA and I promise that each one believes their charity has the best, most worthwhile mission. So, as a manager, how can you reach your goals for the year if you can no longer rely on the need for a tax deduction?
You have to differentiate yourself from the other nonprofits just like any other business would try to find a competitive advantage. Sure, you all can do different events, such as a golf tournament, that bring a source of entertainment for the donor. These events are great and bring great publicity to your organization, but you can’t do them too often because of donor burnout. Plus, they are a ton of work! Of course, there are grants as well, but you are competing with all the other nonprofits. Not to mention, funding guidelines change with grants depending on politicians and directors of foundations. Are you willing to alter your mission just to qualify for funding?
The huge nonprofits that we’ve all heard about reach a level where they no longer have to receive grants and beg for donations just to survive. Yes, they still must do events and grants for special projects, but if all of their events failed one year, the organization would still exist. Why can’t you do the same for your nonprofit?
By opening an investment account, your nonprofit can allow donors to give their investments directly to your organization. This allows the donor to save on capital gain taxes, which brings the “tax-deductible contribution” incentive back into the picture. The account can then be managed to grow as part of the vision of the organization. Perhaps, it could become an endowment where your organization can receive money each year. Instead of searching for the one huge donor, why not have a group of small donors help you build something great over time? You’ll never know unless you open an account. I can do that for you! Contact me and let’s see if we can help your nonprofit grow into the vision of its founders.