Dan Thain

Creative Director

October 24, 2018

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What Does the New Tax Code Mean for Your Fundraising?

The Chronicle of Philanthropy just published a piece on what the new tax code means for 2018 year-end fundraising by Dan Thain, a Creative Director in Washington, D.C. Read an excerpt of Dan’s post below:

What will happen in the first year-end campaign since the new tax code was enacted?  That’s the big question facing nonprofits as they gear up for the biggest fundraising push of the year. To help your organization prepare, here’s an overview of what we know so far, followed by some tips to help you minimize negative impacts and maximize your revenue.

Fewer people are going to itemize their deductions. Estimates of the number of American who claim deductions on their taxes vary, but 5 percent is a generally accepted figure. The doubling of the standard tax deduction to $12,000 for individuals, and $24,000 for couples filing jointly, will mean that fewer people are likely to itemize their tax deductions.

This change may have a negative — but not cataclysmic — effect on year-end giving. Studies predict that the change could reduce charitable giving by an amount between $13 billion and $20 billion. Those are huge amounts, but when compared to the $410 billion donated to charity last year, it translates to a reduction of only 3 to 5 cents on every dollar raised. So, while the threat is real and credible, based on the information we have to date, it’s unlikely to deliver a knockout punch.

Competition for big gifts will increase. Changes to the standard deduction are expected to dampen giving the most among less generous mid-level donors. As a result, competition for major and higher mid-level gifts will likely increase as nonprofits seek to fill holes in their budgets.

The growth of fundraising revenue will continue to outpace inflation ― and offset tax-related reductions. With the exception of 1987, 2008, and 2009, charitable giving has increased every year since 1977, according to Charity Navigator.  It grew by 3 percent in 2017 compared to the year before (adjusted for inflation). We anticipate that charitable giving will continue to grow in spite of the dampening effects of the new tax code and the growth should – in part – mitigate some of the code’s constraining effects.

The burden will not be shared equally. Nonprofits that are second- or third-choice on a donor’s list of giving priorities are the most likely to lose out. This year, donors may only give to their first-choice charity and forgo additional gifts to other organizations. Small, often local, nonprofits may be hit hardest, specifically those whose average direct-response gifts are less than $100.


Wondering how your fundraising efforts will fare in this economy? Let’s talk about it.