How Humanity and Trust Supercharge Nonprofit Fundraising
It’s Tax Day – April 15th — in the U.S.
No fun. Nobody likes paying taxes.
Nobody likes thinking about paying taxes.
Bummer.
A subject most folks avoid like the plague.
And that’s the point.
Talking about taxes is mostly bad news.
It puts folks in a sour mood.
It makes them want to move on and think about something else.
So, why…
Why, oh why, oh why, oh why do nonprofits talk to donors so much about taxes?!?!
Sometimes it’s actually in the very first sentence of a thank you letter.
“Thank you so much for your tax-deductible gift of $_____.”
Too often, it makes its way to the most valuable piece of real estate in your fundraising appeal – the P.S.
“Remember, your gift is tax deductible as provided by law.”
Do you want folks homing in on how much they’re saving or on how much impact their generous contribution is giving to tackle pressing problems?
The primary reason people give isn’t to save on taxes.
They give to express their values, leave a legacy, and bring meaning and purpose into their lives.
They give back, and they pay it forward.
They give to show their love for humanity, the planet and all the flora and fauna that inhabit the earth.
They give so they and others can live happier, healthier and freer lives.
They give because it feels good. Really good, on a biological level. Giving positively impacts our brains. Some have said altruism is a miracle drug.
Avoiding paying taxes is at the bottom of the list.
They’re not giving for the deduction, but because they believe in you.
Still, it’s important charitable activity is tax-protected.
But it’s not because a minority of donors may be able to claim a tax deduction. In fact, since the Tax Act of 2017, claiming the standard deduction tends to be more beneficial for most; only 10% of American donors today itemize their deductions. Before the Tax Act is was 31%; more, but still a minority.
Only about 10% of Americans itemize tax deductions today.
It’s because tax laws form a vital legal boundary. The tax deduction protects freedom to create and operate institutions that make up a civil society separate from the state.
Per the Philanthropy Roundtable:
“Income taxes are the contributions we make to the public good indirectly by force of law. Charitable donations are the contributions we make to the public good directly and voluntarily. Direct giving through donations, and indirect giving through taxes, are dual aspects of our right to self-governance. Altering the charitable deduction would renegotiate the fundamental relationship between citizens and the state, and undermine our ability to shape our own society.”
When people give their money away for the public good, whether by obligation or desire, it’s not theirs to spend. Sure, they get the “warm glow,” but the economic value accrues to the beneficiary upon whom the giving is spent. So, charitable contributions arguably should not be part of the government’s tax base.
A robust civil society enables citizens to have a voice in how money allocated for the public good is spent.
Sometimes it’s fine to remind donors giving can be tax-beneficial.
While not the principal reason folks cite for giving, it’s on the list for plenty. And, even though it’s way down on the list, sometimes you’ll get a larger gift when donors understand the benefits available.
That’s why, towards the end of the calendar (tax) year, it’s useful to remind your supporters of tax-beneficial giving strategies of which they may not be aware.
Some of my favorites are giving appreciated stocks (55% of Americans have money invested in the stock market), giving from IRAs to offset required minimum distributions, and establishing and giving from donor advised funds.
Donors give from the heart — let’s stop making it about taxes.
Don’t lead with tax deductions.
Stop putting it in the headlines of your year-end e-appeals.
“Only 2-days left to get your tax deduction.”
“Grab your tax deduction before December 31st.”
“Last chance to make your tax-deductible year-end donation!”
Instead, consider the myriad benefits donors derive from giving.
Numerous studies point to the fact giving is good for health, happiness, social connection and cooperation. Plus, it evokes gratitude, which more research has shown to be integral to happiness, health, and social bonds.
Tax deductions don’t generate all this goodness, nor do they apply to many of your supporters. Did you know of the 12 million tax returns claiming the charitable deduction in 2022, the two-thirds reporting income of $100,000 or more claimed 90% of deductions, with half of charitable deduction dollars claimed by taxpayers reporting more than $1 million in total income?
When you lead with tax deductions in appeals, acknowledgements and more, you’re only speaking to a narrow slice of your supporter base. And even major donors don’t give primarily for this reason.
Health, happiness, love, community, gratitude and hope are a zillion times more persuasive to the lion’s share of your supporters than how much or how little of their gift may be tax-deductible.
And these are motivations you can lead with no matter what happens with tax policy in the future [And the U.S. Congress will be making changes soon. See here and here.]
So, start practicing having different conversations with donors about the benefits of giving. Once they’ve decided to make a gift, then you can talk to them about how they’d like to make the gift.
Want to Practice Donor Conversations?
The most underacknowledged fundraising truism is this: It’s not about the ‘ask’; it’s about the relationship.
You aren’t ready to ask for a gift until you’ve built a solid, trusting relationship with your major donor prospect. And the best way to do this is by drawing them out ahead of time.
It’s your job to learn enough about your prospect that you can make an ideal “match” between their values and interests and your fundraising offer.
Consider this Question Checklist your key to making a fundraising offer your prospect won’t want to refuse.
You’ll get 40 questions, organized according to categories, all designed so that you won’t leave money on the table.
Major Gifts – 40 Questions to Ask Major Gifts Prospects
Image by Gerd Altmann from Pixabay
