We are pleased announce that our special 2-Part Virtual Planned Giving Boot Camp is happening on June 7 and 14 (two 2.15 hr. sessions) – and we are offering 4.5 hrs. of CFRE credits. Click the link to see more!!!
Tax reform – yikes! Always supposed to simplify but always ends up being more complicated!
If you are a nonprofit/fundraiser, you should be concerned. Presidential proposals in the past have been very frightening to nonprofits who rely mainly on tax deductible gifts. So, what are we facing?
- Firstly, we are a long way from anything actually happening but we do have some details on the Administration’s’ proposed plans.
- Good news – It’s official – the income tax deduction isn’t being tampered with.
- Not sure news – the standard deduction would jump a lot (ie… 2016 for married joint return is $12,600 – would jump to $24,000). In other words, many more people will no longer “itemize” on their tax returns – maybe this deincentivizes those from giving because their gifts no longer get them a cash rebate? More on this below.
- Also not sure news – no more death tax. Ha ha. Last time a president fulfilled his promise to eliminate the estate tax (2001), he actually increased it in many places and it almost swung back to huge rates in 2011. In any case, the roller coaster years of ending estate tax to the snap back year to a decent fix actually didn’t impact planned giving numbers! I don’t think there will be an impact on bequest dollars to charities but I do think I may be very busy dealing with whatever cockamanie scheme they come up with (ie…return of carry-over basis 🙂
Back to #3 – I already saw a Forbes article claiming that the increase in the standard deduction “could decimate charitable giving.” Click here for that article but please read my response!
I totally disagree with that article’s point.
Here is another quote from the article:
The House tax reform blueprint said that a $24,000 standard deduction for joint filers would reduce the percentage of American taxpayers who itemize and take the charitable deduction from 25% (one out of four taxpayers) to 5% (one out of 20).”
Sounds catastrophic except for the fact that most charities receive 80% or more of their fundraising dollars from the top 20% echelon of their donors – and those 20% will likely continue to itemize. Trust me, your major gift donors have more than $24,000 in itemized deductions! I have way more than that!!! (and I’m not anywhere near being a major gift donor – nowhere near it in fact;(
Anyway, take a look at these charts from my training programs:
Americans give consistently – regardless. 2% of disposable personal – 2% of the economy. The dips happen when people are poorer – not upset about taxes. SO, the administration argument that people doing better in general is better for nonprofit fundraising is TRUE!!!! Put more money in their pockets and they will give more. This next slide on total US giving – inflation adjusted since 1975 – makes that point especially in light of the above slides. Giving over those years just went up and up but the percentages of disposable wealth and GDP stayed flat!!
Ok, so how could charities get hurt by the increase of the standard deduction? Well, older people might be impacted who don’t have all of the deductions that younger folks have. They may start getting less benefit from their charitable giving – that is true.
Ah, older meaning age 70.5 and up – just happens that at that age, you are eligible to make direct IRA rollover gifts – no taxes. This is already a great deal for seniors who don’t itemize and if this change happens, you need to step up the IRA rollover marketing!
Maybe we can convince the government to allow direct rollover IRA giving from age 59.5!! That would be really cool.
We’ve just begun with the big tax changes. Stay tuned!
I refuse to jump to any conclusions regarding this year in planned giving (or any year!).
Will Congress/President somehow waterdown or eliminate the charitable deduction?
Possibly but it’s possible that the charitable deduction will be more valuable to your donors than ever before if they limit other deductions but not the charitable one. (Treasury Secretary Mnuchin already said there will be no tampering with the charitable deduction contrary to Trump’s campaign “tax plan”)
Will there be anything new and exciting for fundraisers to bring to donors?
This doesn’t look like a great year for creative charitable legislation. Let’s see if they really “fix” Obamacare or the tax code.
But, there are a few things I can guarantee will happen: the oldest baby-boomers start turning age 71 this year, the age when required minimum distributions (RMDs) from IRAs and other qualified retirement accounts start. There are a lot more boomers than their predecessors, with a lot more IRA funds – IRA charitable rollovers and beneficiary designations should be high on every fundraiser’s wish list.
Bottom line: Planned Giving is turning a corner, Boomers are finally and officially Planned Giving Prospects. Maybe it’s time you and/or your organization realized that it is “now or never” for the Boomers? Train up the staff, invest in the Planned Giving program.
Oh, and check out our 3-part Planned Giving Boot Camp for Major Gift Officers! Next sessions start March 15, 2017 – click here to see how affordable it is to train up to 15 staff members in planned giving!