It is a common misconception that people give to charity for the tax benefit.  In fact, a recent study by Charities Aid Foundation found that 96% of people give because of personal values: a sense of morality and ethics.

Almost every donor interviewed (more than 700 throughout several countries) identified a certain cause they were passionate towards and for 75% of those surveyed, this connection is what motivated them to give. 

Faith and religion play a huge role for many when it comes to giving.  According to Giving USA’s most recent report, “religious” was the #1 recipient of all non-governmental giving in 2022, receiving 27% of all funds donated.  Education was the closest runner up, receiving 14% of donated funds.

Personal experiences are listed as the last motivating factor to give, with 61% of people interviewed citing either something that happened in their past, making them want to “pay it forward,” or a desire to leave a positive legacy. 

Note that “tax benefits” did not make the top 4. 

Indeed, nonprofit professionals know all this about their donors and therefore spend most of their time working on messaging, campaign materials, and donor stewardship.  

What most nonprofit professionals are NOT spending time on is increasing their level of knowledge on current tax environments and the opportunities they create for their donors to connect with their personal values, have a greater impact in their areas of passion, fulfill faith or religious beliefs, and accomplish their life goals.  

Over the next few weeks, Broad Oaks Consulting will publish a series of blogs to help nonprofit professionals, wealth advisors, and nonprofit Board members better understand the tax environment we’re in, the opportunities currently available (but expiring soon), and the questions we should be asking of ourselves and our donors/clients. 

Why is this important?

Of the time nonprofits spend on fund development activities, most of their efforts and employee resources are devoted to soliciting gifts of cash.  What they fail to see is what they are leaving on the table.  For most people, only about 3-5% of their total assets are held in cash.  This makes sense.  Think about it.  

If someone were to ask you, “What’s your biggest asset?” you would most likely respond, “my house.” (It is up for debate whether your home should be considered an asset or a liability, but it remains the most common response.) 

The next largest asset for most people is their retirement savings.  Other assets that may outweigh cash on hand could include investable assets (stocks, bonds, mutual funds), a permanent life insurance policy, annuity, donor advised fund, or any other tangible property.  

In essence, by focusing on cash gifts now, we leave many opportunities untapped to both educate our donors/clients, and benefit the organizations and causes about which they care.  

Why do nonprofits do this?

While the nonprofit sector represents the 3rd largest workforce in the United States behind retail and manufacturing, 92% of nonprofits operate on a budget of less than $1MM a year, making it cost prohibitive to hire and retain qualified staff with a high level of acumen around non-cash gifts like appreciated securities, real estate, art, or other tangible property; planned gifts like CRTs, lead trusts, annuities, and insurance; let alone a firm grasp on state and federal laws governing such gifts.

In addition, most development professionals play multiple roles in the organizations they serve and do not feel confident enough in their knowledge or skills set to have these deeper, more intimate conversations with their donors.  Most have never been offered any type of additional training or connected with resources that can help them.  

We’re here to correct that.  So, where do we begin?  

The 2017 Tax Cuts and Jobs Act (TCJA)

To lay the foundation for the opportunity discussion to come, we must first understand the TCJA.

As Thomas Self and Betty Scheid point out in their article “Preparing for the Tax Cuts and Jobs Acts Sunset,” the TCJA “made sweeping changes to the tax code that affected both business and individuals. The TCJA lowered both corporate and individual income tax rates, almost doubled the amount of the standard deduction, and expanded the amount of the estate and gift exclusion from $5.6 million to $11.18 million, indexed for inflation after 2018.”

If you’re reading this thinking “tax jargon, tax jargon, tax jargon,” let us break it down for you:

The Standard Deduction

The Standard Deduction is where we first need to focus our attention. Deductions (including charitable donations, mortgage interest, college savings plans, etc.) are what help reduce taxable income and allow people pay less in taxes to federal, and often state, governments.  Most people prefer to pay less in taxes. Some feel the U.S. Government is the best steward of their resources and may even donate directly to the U.S. Government (please note the U.S. Government does not accept gifts of cryptocurrency). 

Chances are, your donors/clients are not looking for ways to give more money to the federal government and would rather see the nonprofits they support and believe in put their resources to good use.  Therefore, the TCJA is important to them, and should be important to you.

People give because they care about the good work being done, but they are also taking the deduction on their taxes, if it applies to them. 

Here’s the challenge: The TCJA nearly doubled the standard deduction for individuals from $6,350 in 2017 to $12,000 in 2018. For married couples filing jointly, the deduction rose from $12,700 in 2017 to $24,000 in 2018. For 2024, the deductions are $14,600 and $29,200, respectively. 

Because the standard deduction rose, it’s possible your donors/clients no longer itemize.  

Wealth Managers will know if their clients itemize, and if you are nonprofit professional, simply ask your donors, “Just out of curiosity, do you itemize or take the standard deduction?”

If you’re afraid of asking the question, walk yourself through your fears.  Most gift officers are afraid to ask for two reasons: 

1. What if they offend the donor? 
2. What if the donor asks a follow-up question they don’t know the answer to?

Allow me to allay your fears:  Worst case scenario your donor will either reply, “Why do you ask,” or “That’s none of your business.” Most will just answer the question.

Remember what your role is in your donor’s life.  Your role is to be the conduit between the donor and the organization you represent and help them make the best, most tax-efficient gifts to charity possible.  You are, in essence, their philantrhopic advisor.  

Here’s how I respond to either of the above:

“I only ask because I was recently preparing my own taxes and had an interesting conversation with my CPA.  For people who are charitably inclined, the Tax Cuts and Jobs Act of 2017 created some great tax incentives to give, but it only applies to people who itemize.  Those incentives will sunset next year.” 

If you didn’t recently speak with your CPA about this, be fully transparent and say, “I’m only asking because I recently read an article online that said for people who are charitably inclined….”

[Hint: Anyone giving more to charity (yours and any other causes about which they care) than the standard deduction is probably someone you should be having this conversation with.] 

Charitable Deduction Limits

Now that you know whether your donor itemizes and can take advantage of charitable giving from a tax perspective, what else do you need to know? 

When it comes to deductions, it’s not “one for one,” meaning that a donor gives a dollar and can deduct a dollar from their taxes (it actually was in 2020, but that was a special year).  There are limits. Let’s look at the two most common gifts to charity.  

In general, qualified donations of cash to charity are limited to 60% of AGI (adjusted gross income).  Deductions for contributions of long-term capital property (appreciated securities, insurance policies, real estate, art, etc., held for more than one year) are limited to 30% of AGI.

But wait!  There’s more! And this is where the TCJA becomes critical…

Prior to 2017, higher income earners (single filers with an AGI above $266,700 or joint filers with AGIs above $320,000) often experienced an additional limitation to the limitation above, thanks to what’s known as the PEASE limitation. 

What the heck is the PEASE limitation?

Before the enactment of the TCJA, there was an overall limitation to itemized deductions, including charitable deductions, often referred to as the “PEASE limitation” that could reduce itemized deductions by up to 80% for higher income taxpayers.  

Imagine this in practical terms.  Your donor/client and spouse work hard and earn a good living.  They are kind, charitable, and compassionate. They give generously because they care, but also to take advantage of the tax code so that more of their resources support good, effective organizations, only to discover when they file, those “advantages” don’t fully apply to them.

We have good news!  The last 5 years have been good to them! The TCJA temporarily eliminated the PEASE limitation, “thereby allowing full deduction of itemized deductions regardless of income levels.” This includes charitable deductions.

We all know that most people do not give primarily for tax incentives, but isn’t a tax incentive a nice bonus when it comes to giving?  It empowers your donor/client to give more to organizations and causes they believe are doing good work, placing their hard-earned resources in the hands of people they trust to make the world a better place. 

What now?

Next month we will dive into the SECURE Act and how, combined with the TCJA, a unique asset repositioning and giving opportunity was created.  This strategy will be particularly attractive to people who hold low cost-basis, long-term held securities.  

In the meantime, be thinking of who on your file may fall into the category of people who have just 21 months left to take advantage of this temporary elimination.

Hint: 

1. Who is earning more than $266,700 as an individual or $320,000 jointly?
2. Who is giving more than $14,600 as a single taxpayer or $29,200 as a joint filer? 
3. Who has a concentrated position of low-basis stock? 

(Disclaimer: Neither Broad Oaks Consulting nor Angela Burgess is a CPA, attorney, or licensed wealth advisor/wealth manager.  The above is neither a recommendation nor tax advice, but rather a practical summary and observations of studies.  Organizations and individuals should consult with their own tax and legal advisors before making any financial decisions.)  

Ready or not, here it comes!  The crowded, year-end fundraising frenzy is upon us.  

It is hard to think about trees, lights, and annual appeals while temperatures exceed 100 degrees in much of the country, but now is the time to turn our attention to the final days of the year.  

With overall giving down 10.5% adjusted for inflation last year (Giving USA 2023), we not only owe it to our organizations to do everything we can to secure much needed funding, we owe it to those whose lives are being changed and saved through the tireless work of our coworkers to ensure there are resources available to accomplish our transformational work.

Here are 5 actions you can take in the next 30 days to help bolster your year-end success!

1. Be Intentional
2. Back Plan
3. Connect 
4. Reinforce 
5. Be Grateful

1. Be Intentional

Brainstorm.  Whether you’re a one-person fundraising shop or part of a team of 50, now is the time to have a brainstorming session about your year-end campaign and message.  Heifer International’s Gift Catalog, which is branded as a holiday gift catalog each year, is a great example of how to communicate impact while inviting people to become part of a solution that changes lives.  

Your year-end campaign does not need to be as complex as cataloging your every need, but in every organization, there is a way to unite your need with a call to action that feels good.  

Pro Tip:  Remember the “Power of One.”  One story about one person, one animal, or one environment that has been transformed by your organization is more powerful than all the statistics in the world.  People connect with and are motivated by stories.

2. Back Plan

Timing is everything.  The single largest key to success in any campaign is timing.  Never is this truer than at year-end when the fundraising space is the noisiest.  Take a look at the calendar of events for your organization between September 1 and December 31 to decide on the right timing for the launch of your year-end campaign, as well as the release of reinforcing messaging.  

From there, build a calendar for: 

1. Direct mail pieces.  According to MobileCause, donors are 3 times more likely to make a gift online in response to a direct mail appeal (bcg Connect).  If your organization has the budget, send at least 2 appeals to continue your year-end story, perhaps one in October and one in the 2nd week of December.

2. Email drip campaign.  Tell your year-end story over a series of emails (typically 5-7) with the last 3 emails arriving in inboxes December 30 (qty 1) and December 31 (qty 2).  December 31 remains the single largest giving day of the year, so remind your donors of the impact they can still have as the year comes to a close.

3. Social Media.  In addition to your regular social media presence, craft additional posts (we recommend 15 - 30 to run over 45 - 60 days) that tell your year-end story, have a clear call-to-action, and reinforce your impact.

4. Text messaging.  While SMS receives the 2nd highest return on investment in the direct marketing space according to postalystics, use this judiciously.  Two text messages in total, one on #GivingTuesday and one on another date of your choosing are sufficient.  The other day could be a special anniversary (of your organization, a milestone, a holiday celebration) or simply December 31 - a last chance to give.

Content development.  Once you have your message and your timeline created, consider what components you will need for each of your pieces.  You do not need to have every piece completed by your launch date, but it helps to get as much done as possible during the slower summer months.  Below is an example of back planning into a direct mail piece.

Direct Mail Letter Drop	October 25
Mail components to Printer (leaving time for proofs)	October 18
Audience Selection (notify printer of desired paper and quantity)	October 9
Design work begins (letter, reply device, return envelope, carrier envelope)	September 20
Write copy (leave yourself plenty of time to write copy and add customization)	September 5

Use this same formula to help guide you on copy and asset creation (photos and videos) for emails and social media.  

The early bird gets the worm.  The most successful year-end campaigns launch early, typically during the last week of October.  This is when many direct mail letters go out, especially for organizations that provide holiday gifts or meals to others.  It may seem early, but if your appeal is not hitting mailboxes early, your message may get lost in the bustle of the holiday season.  

Pro Tip: Timing is different for every organization.  While your year-end appeal should go out to your entire database, if your gala is in October, do not mail an appeal letter to donors who just gave to your gala. Instead, segment your audiences and customize your ask.  

What to do about #GivingTuesday? In recent years, #GT has become an exceptionally noisy and rowdy space.  For some organizations, #GT has become part of the culture of philanthropy, but for most organizations, it feels like an overdone marketing ploy that yields little in terms of financial support.  

Regardless of your organization’s #GT experience, your presence needs to be seen and heard on this International Day of Giving.   You can use #GT to “officially” launch your year-end campaign, even if your first direct mail piece, emails, and social media posts went out earlier.  

Announce your fundraising goal and state clearly what achieving that goal will do for your organization.  

3. Connect

Customize.  The more you can customize your communication to your audience, the deeper the bond you form between your donors and your organization.  When donors feel seen and appreciated for what they have already done, they are more inclined to give again and in greater amounts.  

Let’s go back to launching your year-end campaign when your gala is in October.  As stated in Part 1 of this article, it is unwise to send a year-end appeal to a donor at the end of October who just gave to your gala (no matter the amount) that was held earlier in the month.  However, that does not mean that the donor should not receive an ask in December (after having been thanked at least 7 times).  Do not say “no” for your donor! 

Here’s an example of a compassionate and considerate ask: 

“James, we are so grateful for all you have done to protect giraffes in Africa.  You have already given so generously this year, particularly with your $5,000 sponsorship to our gala.  Thank you.  

As the year draws to a close, I’m asking if you might have the capacity to make one, final gift of $1,000 to help us build an enclosure for panda, Jessica, who was just rescued from a circus.  I know it’s a lot to ask, but I also do not know anyone more passionate about the ethical treatment and protection of animals than you.” 

Think about this ask versus a generic ask like, “We are dedicated to protecting giraffes in Africa, but the need doesn’t stop there. We need your help to build an enclosure for panda, Jessica, who was just rescued from a circus.”

Nonprofits (and nonprofit professionals) get very hung up on talking about what we do, rather than focusing on what the donor experiences with us.  Letting your donor know you see (and are grateful for) what they have given and what they care about goes a long way in deepening their connection with you. 

This same language can be used in a face-to-face meeting.  If your donor has yet to make their mid-level or major gift for the year, invite them to coffee or lunch post-gala to get their feedback on the event, and if appropriate, broach the subject there.

Pro Tip: Last donation amount, last donation date, and calendar year donations are all powerful when it comes to letting your donor know you see their sacrifice and value.  Use a spreadsheet and mail merge to create custom paragraphs for your current year, SYBNT, and LYBNT lists.  

Connect with your audience.  Connecting with donors on a mass scale is harder than ever.  Whether you work for a small agency crafting messages that will connect with every donor on your file, or you are a gift officer managing a portfolio of donors, finding ways to connect is challenging. 

Videos are a great way to engage more donors on your file.  Be just vague enough that the message comes across as personalized, even though it is generic and can be pushed out to larger audiences.  For example, “Hello!  I was thinking of you today and knew you would appreciate knowing that Alexis enrolled in a second semester because of scholarship opportunities like the one you provide.   She is such an amazing young woman who wouldn’t be here without financial assistance.  Thank you for being our partner in educating tomorrow’s leaders!”  

Videos do not have to be professionally filmed and edited. In fact, a video recorded on your phone or computer tests better than a professional video every time.  

Pro Tip:  When recording, be aware of your background.  Position yourself in front of a sign of your organization’s logo, or an image that represents those you serve. Make sure the lighting is good.  Most of all, look directly at the camera, be authentic, and be sincere.  The easiest way to do that is to imagine your favorite donor on the other side of the camera and just have a conversation with them.

Get creative.  To truly stand out in a season with so much activity, get creative.  Get together with your team to create something unique that donors and board members alike will want to share.  Do not be afraid to be corny or silly!  Corny and silly are some of the best ways to capture people’s attention and educate them on what you do and how they can support you during a busy time of the year.  

Get personal. For most people, the holidays evoke feelings of family, togetherness, and connection.  Do not be afraid to call donors on Thanksgiving or Christmas Eve - especially if you know they will not be with friends or family.  According to a report released by the U.S. Surgeon General in May 2023, titled "Our Epidemic of Loneliness and Isolation," …even before the COVID-19 pandemic, about half of U.S. adults reported experiencing measurable levels of loneliness.  A simple phone call or video message can go a long way toward helping your donors feel connected to and appreciated by you and your organization.

Send handwritten cards.  Include photos of your own pets, friends, or family members. Especially around the holidays, this is a great time to make yourself more human to your donors, and less a cog in the fundraising wheel.  

4. Reinforce

The ideal year-end campaign will tell one story about one person, animal, or environment served by your organization.  The story will follow the Hero’s Journey and every email, social media post, and direct mail piece will reinforce the message.  

What is the Hero’s Journey?  In his book, “Building a Story Brand,” Donald Miller explores the 7 elements of great storytelling that motivate people to take action.  

Who is your character/hero (who do you serve)?

What is their problem (what is preventing them from achieving their goals)?

Who can help them (who will be their guide on the journey)?  **Hint: the donor**

Who gives them a plan (provides them with the tools)? **Hint: your organization**

What happens if no one is there to help (the cost of failure)?

What does success look like (the desired outcomes)?  **Hint: this is where “Because of you” statements come into play. 

• Because of you, Amanda is not homeless this holiday season.

• Because of you, Shawn lived to see his baby sister open a gift.

• Because of you, puppy Earl found a forever home.

The Hero’s Journey can be told in a few, short sentences, or over several communications.  Year-end is an ideal time to continue reinforcing your organization’s impact through the power of story.

Share.  Sharing posts on social media is never more important than at the holidays.  For days on end, people are sitting around with their families, all on their phones as football streams in the background.  Be sure to ask your Board of Directors to repost your organization's posts and to say something about them.  This will help drive new audiences and reinforce not just your year-end message, but your organization’s validity.  

5. Be Grateful

Perhaps the sharpest arrow in our quiver during year-end is our ability to express gratitude and steward our donors amid all the asking. 

If your year-end appeal drops in late October and your organization begins plugging #GivingTuesday in early November, make sure to take 8-10 days around Thanksgiving to pause and just be grateful.  Below is a list of some of our favorite ways to steward donors, board members, and coworkers: 

1. Thanksgiving Cards.  These can be handmade if you run a residential or activity program or printed with a simple message of thanks. Shutterfly offers some great ideas for Thanksgiving messages, depending on your audience, or you can use an Ai program like ChatGPT to get your creative juices flowing!

2. Sugarwish is a fun way to make sure you never miss the mark on a gift!  Let your donor, coworker, or board member know you are grateful for them with a small token of your appreciation.  You can even add your own brand/logo to Sugarwish packages.

3. Yankee Candle offers personalized candles.  Include a photo of those you serve along with a brief message of gratitude and fill their home with a sensory experience.  

4. Last but certainly not least, just a simple, handwritten card of gratitude.  Be sincere.  Start early and write 2-3 cards a day beginning in mid-September. By Thanksgiving you will have written thoughtful, sincere messages to the top 20% of donors on your file. 

Updates.  Provide your donors and social media audience with your progress towards your year-end goal.  Whether in a newsletter or in one of your appeal emails or social media posts, a simple “We are half-way to our goal” makes people want to get involved.  It is human nature to want to participate in a movement that has traction and momentum! 

Good stewardship.  Remember that every campaign should have a corresponding gift acknowledgement that closes the loop on the ask.  If you are asking for funding to build an enclosure, say something like, “Thank you for responding to our call for help with Jessica’s enclosure.  Because of you, she is feeling safe and supported for the first time in her life.”  

Remember these should be customized for online and direct response gifts.  Nothing says “you’re just a number” like a gift acknowledgement that states simply, “Thank you for your gift of $XX to ABC Charity, EIN-XX-XXXXXX, on YY date.  Your donation is tax-deductible to the amount allowable by law.”  

You’ve come this far - don’t drop the ball at the finish line!  

Wrap up.  Finally, remember to wrap up your year-end campaign.  A top donor complaint is that donors often never hear how (or if) the campaign ended.  Post your results and the impact the funding will have on those you serve online and send out a special communication when your campaign concludes.  Typically, letting your year-end campaign run through the 7th or 8th of January allows enough time for last-minute donations to reach you.  

For gift officers, campaign wrap-ups are your best friend.  We are always looking for reasons to call our donors, and sharing a success your organization experienced is a communication donors love to engage with.  They enjoy feeling part of a collective of people striving to make their community, and the world, a better place.  Besides, isn’t it nice when we get a call simply saying “thank you” without any other ask at the end?  

We know there is a lot to unpack in this article.  Executing all elements may not be feasible for you or your organization this year, so choose just 1 or 2 and commit to them.  Not only will you enhance your year-end giving, but you will also set your organization and yourself up for deeper donor relationships and better fundraising in the year ahead!