What Tax Laws Change… and What They Don’t

January 17, 2018

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Written By: DBD Team

By the Donor By Design Team

We’re taking a break in our Resolution Series to consider the implications of the recent U.S. tax law changes on non-profit fundraising. Both clients and donors alike have been asking us what the changes mean for them.

Jim Mellor just published a DBD Field Notes focused on an unexpected implication of the new tax law for not-for-profit organizations: changes to tax-exempt bonds.

Whether or not your organization is affected by a change to your tax exempt bonds, Danny Maier points out that there’s one thing that has not changed…and it’s more important than any piece of legislation signed into law.

What is that thing?

Relationship development. According to numerous surveys and studies, the leading factor in a high percentage of donors making gifts is the desire to make a difference. Our experience over hundreds of campaigns confirms relationship building as the key to securing donor engagement and a gift. In plain language, donors will continue to contribute, regardless of changes in the tax law, and building relationships will continue to be the key factor in the donor’s ultimate decision.

Will this new tax law affect charitable giving?  Certainly, around the margins. However, when I think to every donor I’ve met, especially those properly cultivated and engaged, rarely do they cite tax-deductibility as a prime motivator for them. Often, it’s a secondary thought — a nice consequence of making a gift.

Did you know?  Today, for those 68 percent of tax payers that do not itemize their taxes and take the standard deduction, there is no financial benefit to making a gift.  Only 32 percent of US taxpayers itemize and only 81 percent claim a charitable gift.  That means only 25% of taxpayers see any financial benefit to making a “tax-deductible” donation.

What does that mean for you? Don’t become distracted or side-tracked by others raising the new tax law as some barrier or obstacle to your fundraising. As has been the case for many years, the key is relationship development.

(And for our friends in Canada or elsewhere around the world, although your tax laws may not have changed, the relationship building message remains the same – relationships and impact matter more than any write off ever could.)

 

Feature photo by Dmitrij Paskevic on Unsplash

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3 responses to “What Tax Laws Change… and What They Don’t”

  1. steve rasmussen says:

    It seems millions of Americans will have a reduction in taxes and potentially more income for discretion including charitable giving. Too many non-profits crying “wolf” are forgetting the generous nature of the American Culture and thus minimizing their need to maintain and build relationships with their donors and not lose respect to donor intent.

    Your article is well stated and thanks for reminding us all of the need for meaningful relationships.

  2. Jennifer says:

    Thanks for those impactful thoughts Danny! So good for us to remember… and so true!