How to Help Donors Give Astutely Before Year-End

Do you want to risk not receiving generous gifts you could have otherwise received, just because you failed to go the extra mile to share relevant, useful and even critical information? Or because you just did the most basic things, failing to do what would have made your communications really stand out?

The Genuine Job of the Philanthropy Facilitator

Your job as a philanthropy facilitator is to do everything in your power to make giving to you as easy, joyful and rewarding as possible.

Everything.

Do you?

Doing everything means more than:

1. crafting a compelling case for support;
2. writing an emotional story;
3. packaging all the elements of a persuasive, gripping appeal;
4. assuring landing pages and donation forms are donor-centric, and
5. assuring web pages display optimally on mobile devices.

Some fundraisers don’t even do the obvious things. They stop at the first two, reasoning the third is best left to marketing staff and the last two are best left to marketing or digital/technology staff. No fundraiser should reason thusly.

Do you really want the success of your appeal to rest on your assumptions you’ll get your best results by delegating responsibility to oversee critical elements of the process to non-fundraisers?

Only fundraisers are laser-focused on what donors need and want vs. what is aesthetically pleasing and/or technically feasible.

In a Nutshell: Your job as a philanthropy facilitator is to  (1) persuade donors to make their most generous gift, and then (2) reward them for so doing. It’s that simple. This means using every tool in your toolbox to optimize your chances to secure this most generous gift. And then, of course, thank the bejeezus out of these wonderful, giving people! 

Sure, you can ‘get away with’ doing less.  You likely won’t be fired if your average gift is $100 rather than $300.  Or if the donor feels “meh” about giving vs. “over-the-moon” jazzed. But… come on!

Ask yourself this question seriously: Why am I in this work?

If your answer is any of the below, then continue doing what you’re doing. (Just don’t tell your boss this is how you feel)

• “It’s just a job.”
• “I want to make a difference, and not work as hard as I would in the for-profit sector.”
• “I want to make a difference, but I’m not going to do anything not in my job description.”
• “I’m really good with people, and in this job I don’t need to learn other skills/bone up on stuff that doesn’t interest me.”

If your answer is any of the below, then consider everything you can do to facilitate increased giving by genuinely helping your donors meet as many of their needs as possible.

• “I want to help as many people as possible who rely on our programs/services.”
• “I want to create a vibrant, caring community to fully address pressing problems.”
• “I want to help people find meaning and joy through philanthropy.”
• “I feel a calling to do this work.”

You Don’t Have to Feel a ‘Calling’

I do suggest, however, you’ll find much greater personal and professional satisfaction in a job exceptionally well done than in a job just ‘phoned in.’

There’s no reason you can’t answer the question of why you’re in this work simply with: “To bring satisfaction, joy and purpose to myself and others.” Sure, you might be able to do this at more than one job. But since you’re in this one now, why not make the most of it?

You’ll make yourself happier. You’ll make other people happier as well.

• The clients you’re better able to serve because you raised more money.
• The donors who feel happier and better rewarded.
• Your colleagues who’ll feel part of a team culture of philanthropy that spurs them forward and makes their work more meaningful.

The best philanthropy facilitators go the extra mile to take care of their constituents’ needs.

Right now, part of your job as a philanthropy facilitator means alerting your donors to special year-end giving opportunities.

It’s the bare minimum to tack “this gift is tax deductible to the extent provided by law” onto the end of your appeal or bottom of your donation landing page.  It’s basically perceived as relatively meaningless ‘fine print’ that is mildly reassuring, but certainly not persuasive.

Why?

Because most readers won’t really understand what it means.

If you want to persuade, you’ve got to offer up more information.

Don’t put this on the back burner.  NOW is when folks are thinking about year-end philanthropy.

If you act quickly, you may persuade some of your supporters to give more than they were previously considering giving. And, because you helped them, they will get a ‘warm glow’ shot of dopamine that will make them feel warm and fuzzy.  And, because of the information you shared, they’ll associate this good feeling with you!

Astute Year-End Giving Advice

You may recall the Tax Reform Act of 2017 significantly reduced the incentive to itemize by roughly doubling the standard deduction and making this option more attractive for more taxpayers. Thus, many donors lost the incentive to give based on saving on taxes alone (luckily, this isn’t the primary reason most people give).The 2020 CARES Act instituted a $300 above-the-line deduction for non-itemizers for 2020 and 2021, but that has gone away too. Also, the deduction for cash contributions to public charities is no longer up to 100% of adjusted gross income (AGI) for those who itemize. Them’s the facts.

Folks can no longer deduct charitable gifts unless they itemize, and they can only do so up to 60% of AGI. But… there are other ways you can (1) help donors get the most bang for their charitable buck, and (2) encourage a larger gift than that donor may have otherwise considered.

1.  Let Donors Know You Accept Appreciated Assets 

For donors who own such assets, giving them is a smart way to accomplish their philanthropic objectives. It enables them to avoid the capital gains taxes they would otherwise have to pay, and the full value of their gift goes to further your good work. Why not let people know you accept donations of appreciated non-cash assets, such as stock, mutual funds, and/or real estate?   Include this information on your website where it’s easy for donors to find.

You might even go the extra mile by explaining how this may work to their advantage.

2. Suggest a Gift Swap of Appreciated Portfolio Assets and Replacement with New Shares

Again, donors who have appreciated assets reap a greater benefit from donating them than from donating cash. Yet relatively few donors consider this giving option, and relatively few nonprofits actively encourage donors to give astutely in this manner.  Wouldn’t you like to stand out by being the “good guy?”

Here’s the win/win/win deal:

1. A donation of long-term appreciated assets (owned more than a year) avoids capital gains taxes on the appreciation.

2. A donation of appreciated assets gets the same income tax deduction as a cash gift.

3. A donor who doesn’t want to part with the stock can immediately purchase new shares in the same company with the cash they would have otherwise donated. Now their stock has a new cost basis, and any future appreciation gain will be minimized.

3.  Note that Required Minimum Distributions (RMDs) from IRAs are Back

Starting at age 73 (used to be 70 1/2) the IRS mandates IRA owners to take annual income withdrawals, known as Required Minimum Distributions (RMDs). If they don’t take the RMD, they can be subject to up to a 50% excised tax on this amount. For donors who don’t need the income, and really don’t want it because it will lift them to a higher tax bracket, what’s known as a ‘Charitable IRA Rollover’ is a useful strategy. Rather than face a big tax bill, a potential surtax on net investment income, and increases iin Social Security premiums for Medicare Part B and Part D, IRA owners age 70 ½ or older may gift $100,000 annually from an IRA to charity, tax-free.  Couples can each transfer this amount, for a total of $200,000. The gift must be transferred directly from the IRA to the charity. The money cannot first be paid to the donor.

It’s a wise move to promote these gifts as they offer a way for donors who don’t itemize to add to the standard deduction by giving away pre-tax assets completely tax-free. And it’s a way for folks to reduce the balance in their IRAs, thereby lowering the amount of future RMDs.

For donors interested in reducing the size of their IRA, it’s important to remind them of this rollover distribution opportunity.  Gifting IRA assets now can provide a future estate tax savings for donors with taxable estates (over $12.92 million per individual in 2023). Since income earned in IRAs is pre-tax, any amount left after a donor’s death is subject to a double tax – income (known as “income in respect of a decedent”) and estate.  For this reason, it’s a terrific asset to give to charity, leaving heirs with non-IRA assets that will not be burdened with income taxes.

4.  Suggest a Gift from an IRA in lieu of a Will

For donors considering leaving your charity a bequest, suggest they consider naming you as a beneficiary of their IRA rather than providing for you in their will. As noted above, as a charity you’ll pay no income tax. And no estate tax. Other heirs, however, would be subject to both these taxes. When donors leave heirs an inheritance through non-IRA assets, only the estate tax comes into play. So net/net, the donor gets to give away more money by giving astutely.

Many donors simply don’t know they can do this.  They think naming their heirs as beneficiaries of their IRA makes sense, and they’ll leave any charitable bequests from other sources in their will. It should be exactly the reverse! Not only do heirs pay double taxes, but starting last year heirs (except spouses) must take out all funds and pay taxes within 10 years of inheriting.

Suggesting this legacy giving strategy to donors has an added bonus! It’s much easier for donors to change their IRA beneficiary designation than it is for them to change their will. The former is a simple form they can request from the financial institution holding their IRA. The latter requires a trip to an attorney, which is inconvenient and costs money. Don’t you want to increase your chances of securing a legacy gift by making it easy for donors?

5. Suggest Bunching Gifts to Exceed the Standard Deduction

Again, the Tax Reform Act of 2017 created higher standard deductions, making them a more attractive alternative than itemizing for many people. This meant the charitable deduction was no longer a giving incentive. Some folks figured out a “bunching” strategy where they doubled up on gifts one year, taking the charitable deduction; they made no gifts the following year and took the standard deduction. This has become a favored strategy for giving to donor advised funds.

NOTE: Some of your donors may have reserves of bunched giving sitting in their DAFs. And they may have forgotten it’s there, waiting to be distributed to charitable beneficiaries. Smart charities will ask donors if they have a DAF, and whether they might consider making a distribution to your charity from this potentially forgotten money ‘burning a hole in their pocket.’

How Do You Share Tax Information?

There are a number of ways to alert prospective donors to ways they may be able to make larger gifts by saving on income and capital gains taxes.

Include information about tax-beneficial giving in written materials.

Make sure this information is on the giving pages of your website. This may include landing pages as well as donation forms. Also include links to this information in e-appeals. And ask folks if they’d like information about tax-beneficial giving strategies in your written appeal remit pieces. Finally, consider an article about tax-beneficial giving in one or more of your newsletters between now and the end of the year.

Here are a few examples:

• Jewish Federation of Cleveland
• Jewish Federation of Greater Kansas City
• Catholic Charities of Des Moines
• Community Foundation of Western Nevada
• St. Jude Children’s Research Hospital

Suggest tax-beneficial giving alternatives when speaking with major donor prospects.

Once the gift is closed, why not ask the donor how they’d like to make the gift? Cash? Appreciated securities? IRA rollover? DAF?  Let them know your understanding of the benefits of these various disbursement strategies; then suggest they consult with their own advisors.

Always include a disclaimer.

Remind folks in your communications your nonprofit does not offer professional legal or financial advice and it is always recommended they consult with their personal advisors. Make it clear you are offering suggestions for informational purposes only, and they may wish to discuss this with their own professionals to determine if they are applicable to their own situation. And to assure they are receiving the most accurate, up-to-date information.

Very important: Give a name and contact information for someone on your staff with whom donors can connect. Make sure someone is monitoring this individual’s inbox and voicemail during the end of the year. You don’t want to lose a gift because someone happens to be out sick or on vacation! If donors have questions, you don’t want them stopped dead in their tracks pondering how to get answers. Make it super easy for them to get in touch with you via phone, email and website FAQs. 

Want More Year-End Giving Strategies?

Your all-in-one guide for ticking off things you may be missing or not quite have finished

If you’ve got your year-end fundraising plan completely under control, yay you!  If you need to spend a bit of time making a list of ‘to-do’s, you’ve still got some time. Doing something is better than doing nothing during the last critical weeks of the year. Grab my Year-End Fundraising Solution Kit – To-Do’s and Checklists. It’s a step-by-step comprehensive road map to effective year-end fundraising. After working 30+ years in the trenches, I can vouch for this stuff. It’s tried and true! Not satisfied? All Clairification products come with a 30-day, no-questions-asked, 100% money-back guarantee. You truly can’t lose!

And if you can’t do everything you wish you could this year, get ahead of the game and put it on your list for next year.

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