Recording of Tax Briefing on Sale!

We had 250 people on our live tax briefing today!

The session was very well received – here are a few of the comments we received:

“Thanks for the webinar today. Any chance you’d be interested in holding a seminar for donors about how the new tax bill might affect their charitable giving.”

“Nice job on the presentation today.”

“Thoroughly enjoyed and was educated by your webinar today.”

“Thank you so much for an informative session this morning!”

“Thanks so much for the webinar presentation today regarding the 2018 Tax Law changes — I found it to be very helpful.”

“Thoroughly enjoyed the presentation this morning and got a number of questions answered, plus good direction for the future with the 70 1/2s and their IRAs. Thanks!”

If you are still interested in the topic – you can now purchase the recording!


Tax Deal: Does it impact fundraising?

Image result for tax plan cartoonIt looks like we’ll have a tax bill signed any day and now we are left trying to figure out what impact, if any, this may have on nonprofit fundraising.

While many final details are still to be revealed, here are the main items that may impact our donors and their giving:

  • “[T]he corporate tax rate would be cut to 21 percent, while the top tax rate for individuals would drop to 37 percent from 39.6 percent. The new rates would take effect next year.”  –  Highest earner get a bit of a break (but might very well get hurt by other things in the bill). For example, if your AGI is $500,000, you just saved approximately $13,000.  You will probably lose more than that if you live in an expensive neighborhood with a really big mortgage (i.e. your real estate taxes are more than $10,000 a year and your mortgage is over $750,000 – see below).
  • “The deduction for state and local taxes would be capped at $10,000 and taxpayers would be able to choose to deduct their property or income taxes, source said.” – Is the $13,000+ break from bullet point # 1 enough to offset the loss from this bill if you pay more than $10,000 in real estate taxes?  The irony of this point is that it really hurts the wealthier sector – something not reported in the media very well.
  • “The standard deduction would be doubled under the deal, to $12,000 for individuals and $24,000 for families.” – This may actually put more money in the pockets of your middle and lower middle earners!  Again, not reported in the media very well. Still, the question is if this disincentivizes charitable giving for those who now will no longer need to itemize?  I suspect not but I am ready to start touting the IRS rollover giving provision in a big way for those 70.5+.  You know what, I will be shocked if this hurts charities at all.
  • “Republicans senators leaving a GOP lunch told NBC News that the agreement would also set deductions for pass-through income at 20 percent.” – I am not sure what this means!
  • “Under the deal, the mortgage interest deduction would be allowed on loans up to $750,000, the sources said.” – Again, hurts our wealthiest sector.  Ironically, nonprofit fundraising could be hurt if this sector is feeling really poor after they finally realize what happened.  Not sure it will impact charity!

The verdict?

Still out.  I am leaning towards people on the higher wealth/earning end looking for more deductions and therefore more charitable giving!  Ok, I am an optimist.  Most likely result for nonprofits: no change.

Look for more posts on this topic as the final details come to light.

Planned Giving in 2017?

Image result for planned giving

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!

Fiscal Cliff compromise in works? Not great news for charitable givers leaking out…

I saw it – and then it disappeared.  Early this morning, the Yahoo front page news story about a potential Fiscal Cliff compromise had it and then when I went back later, it was gone.

The piece I read around 6:30 am on Yahoo mentioned that the compromise would likely include a 28% cap on deductions and a $3.5 million estate tax exemption with a 45% top estate tax rate.  Ouch on the 28% deduction cap; o.k. on the estate tax compromise. (Note: it mysteriously disappeared and can’t be found in any web posting – maybe it was revealing too much, maybe not factually correct)

I have been predicting on this blog that a deduction cap will be slipped in any Fiscal Cliff compromise.  It’s an easy target.  Who is going to complain? Maybe your donors won’t notice that they just created a surtax of $.05 to $.10 per charitable dollar given for itemizers?  On a $1,000 charitable gift, that is about $50 to $100 more tax dollars your donor will be paying.  On $10,000, that is $500 to $1,000 more in tax.  On a charitable gift of $100,000, that is a $5,000 to $10,000 penalty.  On the $1 million dollar giver, that is a whopping $50,000 to $100,000 surcharge on their charitable giving.  We are talking a lot of money for the biggest donors.

No one can really tell what this may do to charitable giving (besides boosting 2012 Donor Advised Funding giving and gift acceleration in general).  But, it is still bad news for philanthropy.

Top 10 Reasons Why Capping Deductions is a Bad Idea

With the Fiscal Cliff possibly being averted as we speak, it is very easy to see some tampering with deductions – an easy target because they represent easy numbers.  By “easy numbers”, I mean that Congress always has to make their numbers add up – with as little political capital being used  as possible.

And, by lowering the value of deductions or capping deductions, Congress would essentially be reducing the value of charitable income tax deductions for those in higher income tax brackets (among other areas formerly favored/encouraged like mortgage interest). While it looks like easy money to politicians, there are so many reasons why this idea stinks.

Here are my top ten reasons why Congress should not tamper with deductions (particularly charitable deductions):

  1. Lowering the value of charitable deductions is basically a new tax on charitable givers – if you are going to raise taxes, why not raise taxes on non-charitable givers?  At least charitable givers are putting their money to good use feeding hungry people, educating the young, saving the environment….
  2. On that vain, why not at least raise taxes equally for charitable and non-charitable givers – again, why penalize those who are trying to do good with their money!
  3. People who give to charity (and itemize) are supporting the public good – things that the government would have to provide if not for their charitable contributions!  Ok Congress, you might save a few dollars but by messing with charitable deductions, who knows the new costs you might incur (in jobs and service losses) if your plan really causes a drop in charitable giving.
  4. The idea of offering incentives for charitable giving is to encourage and reward people to support the public good – again, stuff that the government might have to offer if nonprofits weren’t providing it.  By reducing the value of the charitable deduction, aren’t you discouraging people from giving to charity?  Sure you want to do that?
  5. America is by far the most charitable nation in the world – hands down.  You want us to be like Europe?
  6. Nonprofit fundraising is a $300 billion a year industry (according to Giving U.S.A.) – that is about the amount raised each year ($200 million+ from individuals).  That money is not only going to support lot’s of good causes that the government now doesn’t need to provide; that money actually supports thousands upon thousands of jobs in the nonprofit sector – many of which will be lost if your tampering significantly reduced those revenue figures.
  7. Be honest – don’t raise taxes by reducing the value of formerly encouraged behavior because people won’t notice until next April or ever.  Come on, be straight with us and treat us fairly.
  8. Bean-counting – the way accountants find ways to “raise” revenue by cutting expenses – is the antithesis of growth.  You don’t grow by cutting corners – you just make your numbers look good in the short term (something corporate America loves to do).  Cutting the value of  the charitable deduction is bean-counting. Yes, in the short term, your numbers might look  better.  In the long run, you might do significant damage to the nonprofit sector and cause the government to have provide more services.
  9. Do you want to encourage positive behavior through the tax code or not?  Do you want encourage home ownership or not (mortgage deduction gets hit with the deduction cap, too)?  Clearly, the government has had an interest in promoting various things through tax benefits – now you are going to stealth-fully pull them out to make your numbers look good.
  10. Readers – please write in your own comments!