I was recently asked about the impact of the Tax Cuts and Jobs Act that went into effect on January 1, 2018 on major donor giving. In that tax reform, the standard deduction—the amount an individual or couple can claim without justifying it—essentially doubled. The fears of many is that having a higher deduction would limit giving because donors will not get a tax benefit if their deductions do not surpass the standard deduction.
There are a lot of debates and studies on the topic. However, the bottom line is that it is too early to tell. That said, here are a couple things we do know:
- I polled my colleagues on the capital campaign and major gifts teams at Dickerson, Bakker & Associates, and not one has seen any evidence that the recent tax reform has impacted giving yet. Neither have I.
- Taxes are not a motivator for why major donors give. True, major gifts may impact when a major donor gives and/or what vehicle, but their actual motivation TO give is based in other things (such as expression of their values or it feels good).
- Most nonprofits lack a sufficiently robust major donor program for the tax reform to make a significant impact anyway.
As fundraisers and nonprofit professionals, we can invest a whole bunch of time worrying about the tax reform. In fact, tax reform, busy donor schedules, and donor fatigue can all become excuses for ineffective major donor programs. The truth is, we need to be investing more time thinking about how to make our major donor program more effective than worrying about outside factors. Sadly, too many nonprofits are failing at the fundamentals of major donor fundraising.
Thankfully, it is not too late to invest in your major donor efforts.
You can start by reviewing your best donor prospects and assigning them to a fundraising staff member or a volunteer’s portfolio. As I write this, I am returning from a client visit in the Pacific Northwest who has a comparatively sophisticated major giving program. During my visit, I reviewed their portfolios only to discover they were missing several dozen donors with significant giving potential. Your nonprofit may be neglecting major donors as well.
Next, identify “next step touch points” for each donor in that portfolio. You may invite them to a nonprofit mini-event, share your annual impact report, drop off a thank you gift, or offer a tour. It is likely time to ask for the gift. Contrary to popular opinion, most major donors are not asked enough! When you ask, be sure that what you are offering is appropriate for a major donor. It is all too common to see fundraising professionals asking for either too little or offering something that appeals to a mainstream donor and multiplying the dollar handle into a major donor range. Those approaches leave money on the table and reduce your nonprofit’s revenue.
Does this ring true for your organization?
I’ll be speaking at length on this topic at Faith in Numbers on October 30, 2018. Sign up for the conference today to hear more!