Will Your Year-End Giving Communication Be Different This Year?
Fundraisers are entering their year-end mode, and for many organizations the majority of their donations come in the last quarter of the calendar year. What is unknown is how the new tax law will change the way people give this season.
Even though there was a change in the itemized deductions limits, it’s unlikely taxpayers adjusted their income tax withholdings. If donors have not been planning, they won’t discover the tax consequences of the tax law until next year. That’s why recognizing donor uncertainty regardin taxes makes good marketing sense.
As humans, we are extremely susceptible to emotion. We base our decisions on emotions first and logic second. When anxious, we want to take action to protect ourselves and our communities. Using this emotion in your communication can help your donors believe they have a chance to improve something. Conversely, something may go wrong if they don’t act. By getting them to feel responsible for something they can control, you can get donors to act.
Addressing your donors’ uneasiness about taxes and economic markets can provide them with a source of predictability about their philanthropy. Communicate to your donors that there are still tax-advantaged ways to support the organizations they care about. And here’s how:
- Make gifts of appreciated property such as publicly-traded securities to charity.
Under the new law, donors can make gifts of appreciated assets they have owned for at least one year without triggering capital gain tax. If donors itemize their deductions, they will get the double tax benefit of income tax charitable deductions based on the full value of the appreciated assets in addition to complete capital gain tax avoidance.
- The charitable IRA rollover is a tax-smart gift option.
If donors are over 70½, they can make a direct transfer from traditional IRA or Roth IRA to charity of up to $100,000. Donors will avoid all income taxes on withdrawal, even if they don’t itemize!
- Make larger gifts to charity.
Donors total deductions may put them close to the threshold that allows them to itemize deductions that offer greater tax benefits than taking the standard deduction. In this case, a donor might consider making a larger charitable gift so that he or she can enjoy the additional tax savings that itemizing would offer.
It’s not too late to have a positive effect on your donors’ 2018 tax returns and it will be a win-win for all!