Fundraising & the U.S. Tax Bill: What you don’t know . . . PAYGO

Much has been written about the potential impact of the U.S. tax bill recently passed by both houses of Congress and signed into law by the President (see my article Ho Ho Nooooo: 2018 Fundraising Earthquakes?). In I Hope I am Wrong Al Cantor raises the concern that as a result “Financial incentives to donate to charity will drop dramatically.”

Al raises understandable concerns, but as I said to members of a listserv recently, there are many factors at work that can and likely will impact the future of charitable giving, such as:

• WWII generation is passing
• Many Boomers have not saved enough for retirement
• Young (and even older) people are burdened with college loan debt
• Significant increase in number of NPOs in the U.S.
• Anyone can be a fundraiser, e.g., a member of my family recently set up a Go Fund Me page to raise capital for a rock climbing trip

What’s more donor retention has been on the decline for some time. Speaking about donor retention Professor Adrian Sargeant has said: 

“The donor retention landscape is actually lousy at the moment and is going of all accounts, from bad to worse.” (Bloomerang, A Guide to Donor Retention).

Add to the above a not much spoken about, but real outcome of the passage and signing of the U.S.  tax bill: triggering PAYGO. What’s PAYGO and what does it mean for donors, particularly those on Medicare?

PAYGO is the Statutory Pay-As-You-Go Act of 2010 and unless Congress acts PAYGO will result in a potential $25 billion cut in Medicare spending.  

As is clear there are many reasons to be concerned. However, as I also said to listserv members there are other factors to keep in mind:

• People who volunteer donate (and 67 million people in the U.S. volunteered in 2017)
• People give for many reasons beyond taxes
• The vast majority of donors were already exempt from federal estate taxes
• There will be many people looking to make estate gifts 20% of women age 51-56 are childless (Big Planned Gifts in Offing as Childless Boomers Age)

What’s a nonprofit to do?

1. Consider reading 2018 Shifting Fundraising Landscapes which focuses on leading through change.
2. Review this FEP Report: 76/4, 89/14, 96/33: The New Fundraising Rules You Need to Know and
3. Call and meet with donors and ask them what they think.

As a former colleague of mine liked to say “no on raises money sitting behind a desk.” Ask donors what their plans are and if given the opportunity make the case for why ongoing support for your nonprofit is needed now more than ever.

Finally, consider placing in a prominent location these words from Ghandi:

“When I despair, I remember that all through history the way of truth and love have always won.”

Sophie W. Penney, Ph.D. is President of i5 Fundraising and is the Senior Program Coordinator and Lecturer for Penn State’s all online Certificate Program in Fundraising Leadership.