New Tax Law and Its Affect on Your Organization

Love it or hate it, the new tax bill is now the law of the land. After a lot of research and analysis, it’s a mixed bag as far as the impact on charitable giving and the ways in which people will respond. Of course, it's

too soon for know for sure, but there are some conclusions we can draw.

The Standard Deduction Doubled:

  • This will reduce the number of itemizing households from 30% to an estimated 5%. Only the households that itemize will realize tax benefits from the charitable gifts they make. The rest of the households will not receive a tax benefit from their charitable gifts.
  • The tax plan – according to non-partisan analysis – benefits high net-worth households more than low-income and middle-class households.

Practical Impacts:

  • You have definite opportunities with major donors. Make sure you’re talking to them and how they can make a difference in your mission with their generosity.
  • Mid-level donors need to hear from you, now more than ever, that their gifts make a difference in how you fulfill your mission. So, love ‘em up good!
  • You don’t need to change your boiler plate “tax deductible” language on gift receipts.
  • Emphasize your mission as the chief reason people should support your organization;

IMO:

  • In my opinion, you won’t see a huge change from mid-level givers. Major donors, however, may feel like they have more capacity and may be positioned to increase their giving.

Corporate Tax Rate Slashed:

  • The largest constituency group to benefit from the new tax bill is corporations. Their tax rate was slashed from 35% to 21%. We’ve already seen big announcements from IBM, AT&T and others about employee bonuses and increases in charitable giving.
  • Get your board members, who are successful business men and women out in front of the companies with whom they do business to advocate for your cause.

Practical Impacts

  • This is the time to beef up your corporate case for support and corporate giving programs.
  • Remember, corporations give for recognition, so make sure you’re providing them with the right amount of visibility as a thank you for their gifts/event sponsorships.

IMO:

  • In my opinion, you have some real opportunities with corporate givers. Talk to them early, though. There is always bureaucracy and competition for corporate donations.

The Estate Tax Exemption Doubled:

  • The estate tax exemption nearly doubled significantly reducing the incentive for people to consider including charitable gifts in their wills and estate planning. According to the Congressional Budget Office, this factor could negatively impact bequests by 16%-28%.  We actually experienced this when the estate tax was temporarily repealed in 2010. Charitable bequests declined by 37%!

Practical Impacts:

  • Legacy donors need to know that they are important and needed. Make sure your legacy donors are being recognized appropriately.
  • Only your most passionate donors are likely candidates for bequests and receive fewer incentives to do so.

IMO:

In my opinion, bequests will definitely reduce. You’ll have to work hard to make the case – even with people who previously told you they have you represented in their estate.

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