Tons of writers in major media have been fretting about the new tax law.
“Tax bill could turn philanthropy into a pursuit only for the rich.” – 12/23/17 Todd Frankel [Washington Post]
“Nonprofits are the unintended victims of the new tax bill.” – 12/29/17 Chris Gates [The Hill]
“The sky is falling!” – 12/17/43 Chicken Little [Wikipedia]
Don’t listen to naysayers and doomsday prognosticators.
I think they enjoy seeing blood on the streets.
“If it bleeds, it leads.” That’s what I was taught as a journalism major.
Look, these reporters and analysts have been wrong about just about everything for quite a while.
Remember, almost 50 percent of all charitable donations come from the top one percent and 80 percent of all charitable donations come from the top 20 percent. Philanthropy is done by the rich. Charity is done by the rest of us. There is a difference.
Plus, charitable giving has mirrored the GDP for over 40 years. If the tax law increases GDP, nonprofits will benefit.
And, lastly, people give because it makes them feel good! It ain’t about the tax write-offs.
Your job: Make people feel good! Provide value. Find out why they care and what interests them. Then, market to them in a highly-personalized, relevant fashion that elicits emotion.
Do that and you’ll be just fine.
>>Donor Psychology: Do you know what really makes your supporters feel good?
>>The most powerful motivators of major gifts and legacy gifts.
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I disagree; your analysis is incomplete. We have already seen a dramatic drop in our 2017 annual appeal, and other nonprofits we have spoken with are experiencing the same impact. Donors in high tax states such as ours are anticipating the pinch, and are less generous as a result.
Thanks for your comment Beth. But only time will tell. Your evidence is anecdotal. Mine is somewhat philosophical and predictive.
Let’s regroup on this in one year.
We have seen a dramatic rise in our 2017 appeals; with a focus on donor impact and lots of gratitude. A few have told us they were pre-funding their 2018 donations but I honestly don’t believe it was the reason for our increase; nor do I believe it will hurt 2018. My thoughts on the tax fears:
Quoth the Bard,
“… it is a tale
Told by an idiot, full of sound and fury,
Yes, time will tell.
Cathie, you go girl!! Thanks for your input!
I agree it’s too early to tell, and generally it will just accelerate the trend of an increasing percentage of giving coming from the wealthiest. But I also fear no one will ever know the impact of the estate tax change, which I predict will result in many millions going to heirs instead of to foundations, DAFs and nonprofits. It will of course be very hard to measure the absence of those gifts.
P.S. I also find that differentiation of philanthropy and charity to be dismissive of the thoughtful gifts of so many lower and middle income people.
Thanks for your contribution Paul.
I’ve always felt that charity is about giving someone a fish. Philanthropy is more about helping them learn to fish.
Interestingly, Googling “charity” brings up the following: the voluntary giving of help, typically in the form of money, to those in need.
While doing the same for “philanthropy” brings up: the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes.
At least there, it’s a matter of giving help vs. promoting the welfare of others.
I didn’t mean to dismiss people’s thoughtfulness. But I feel it would be equally dismissive of, for example, Carnegie’s philanthropic efforts (to promote the welfare of others) if we were to agree that his efforts are the same as a middle class person’s $20 donations.
It may also be that the messaging becomes a self-fulfilling prophesy, that people will use taxes as justification to stop giving.
I agree that what will transpire remains to be seen. There are also other factors to consider that could or will impact charitable giving, such as implementation of PAYGO (automatic spending cuts triggered by passage of the tax bill, (see my article on the topic at: https://www.linkedin.com/pulse/us-tax-bill-what-you-dont-know-paygo-sophie-penney/)
I hadn’t thought of it that way. Thanks Sophie.
You’ve done it again Greg! This is the first cogent info about the tax law I’ve seen. Your readers might be interested and reassured to know that some years ago, Australia repealed all estate tax. Charities were shaking in their boots about this marking the end of planned giving and donor tax motivation. What happened. Charitable planned giving increased. Having seen more than one tax reform that was supposed to be the end of charitable giving I want to say to my colleagues “just chill”
BTW I can’t remember where I learned this little nugget about Australia, probably from you.
Wow! That’s fascinating Becky. Thanks so much for sharing.
Your article inspired me! So, I wrote one about the ways in which the 2018 tax law actually INCREASES charitable giving deductions in several circumstances. I hope it calms some of “the sky is falling” reaction. I put it here:
Awesome. I already shared it on LinkedIn (my personal stream and the Major & Planned Gift Marketers Group.
Greg, thank you for sharing your thoughts about the new tax code. Like you, I’m optimistic. First, the new tax law contains many provisions that are actually good for charities. Second, there is much that nonprofit organizations can and should be doing to mitigate any possible downside risk.
Folks can checkout my analysis here: https://michaelrosensays.wordpress.com/2018/01/05/how-bad-is-the-new-tax-code-for-your-charity/