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How will the 2017 tax law impact nonprofit fundraising?

by: Allison Sanka on

The largest piece of tax reform since the Reagan administration has been passed and signed by the President. The real impacts from the new tax law changes have yet to be seen, but all of us in the nonprofit world will be watching carefully as the impact on nonprofit fundraising initiatives unfolds. Meanwhile, some initial concerns are being addressed.

According to an article in The Nonprofit Times, the Association Fundraising Professionals believes there will be a huge decline in cash gifts. The hypothesis is that because of the increase in the standard deduction, fewer taxpayers will itemize on their returns. Because so many depend on those deductions on their itemized tax returns, without that tax benefit fewer people will give cash gifts to nonprofits. 

"The Association Fundraising Professionals is anticipating a reduction in itemizers of about 30 million on account of the standard deduction increase. About 82 percent of individual giving comes from itemizers, per Giving USA estimates, equating to an annual loss in giving of between $12 billion and $20 billion." [read more]

Those are some big numbers to ponder. 

The face of donors is changing. Many believe the motivation to give is not enough to suppress the projected 4.5% drop in annual giving next year. According to The Washington Post:

"[The] decline is expected to be concentrated among gifts from the middle of the income scale. The richest Americans will mostly keep their ability to take the tax break. That could create new winners and losers in philanthropy. Nonprofits have long noticed that the wealthy are more likely to cut big checks to support museums and universities, while smaller donors tend to give to social-service agencies and religious organizations. Charities fear that this shift could change how the public views donating and alter the priorities of nonprofits." [read more]

Doom and gloom aside, what's the opportunity for planned giving? Plenty, actually. Middle and lower income loyal donors may now be the perfect audience for planned gifts. They may have given in the past but those annual gifts may drop off, while the wealthy will still likely benefit from itemization.

It's more important than ever to kick your PG program into high gear with a solid, awareness-building marketing program. Building your planned giving program will not only bring in some additional funds now and in the years to come, but also it will help ensure the long-term health of your organization. Money needs to come in from as many avenues as possible, and the best time to market your PG program is now.


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