Opportunities to Respond to the New Tax Law to Benefit Your Organization

There is much unknown about the effects the new tax law will have on philanthropic giving in 2018. Since most of my work is with congregations and church-related organizations, I will limit my perspective to how the church and related organizations should respond in 2018 to the new tax plan.  Many philanthropic leaders are nervous and some are even afraid. This is natural in a time of change. I don’t think we need to worry, but organizations which rely on donations should make certain they are telling their story well and positioning themselves to remain in the front of the mind of donors.

One reason churches and other charities see such large revenues in December is that people are wanting to give before the end of the year so that they can claim this charitable deduction. The tax code has for decades held provision to allow for charitable deductions by those who “itemize deductions”. While the charitable deduction will still be allowed, the new standard deduction has basically doubled which will result in fewer people claiming this deduction. This means that people are getting as much or more deduction without having to itemize.

Approximately 70% of Americans in 2016 took the standard deduction and did not itemize. People with larger incomes tend to be more likely to itemize. Reasonably, the effect of losing the charitable deduction could be felt more by those with larger incomes who are currently your donors (https://taxfoundation.org/who-itemizes-deductions/). At the same time, most Americans with larger incomes will be receiving significant tax breaks.  And a few of these large donors will still choose to itemize deductions.

I encourage you to not focus on deductibility of gifts. In my eighteen years of development experience with the church and church related organizations, I have found very few donors who are “deduction motivated”. Many appreciate that they can claim the deduction for tax purposes, but that isn’t why they give. Churches and other non-profit organizations should focus on what motivates donors to give and how to do a better job of raising up that motivation.

The giving landscape is changing. Donors are giving to fewer and fewer charities. For years, the church has been receiving a smaller percentage of overall giving in America. This has had nothing to do with tax deductibility, but with the failure to tell our missional story—a story of what God is doing in our world and through our churches and ministries today. I must acknowledge that even as the church receives a smaller percentage of gifts overall that giving over the last two years has been at record levels.

Yes, mid-level and larger donors may lose out on their ability to deduct their gift to your organization. Many of these givers will actually realize a greater deduction with the new standard deduction and most will have more money because their taxes will go down.

Historically, churches and charities have benefited when people have had more money at their disposal, but the benefit is not as much as might be expected. Instead, both churches and charities improve giving to the greatest extent when telling their stories well—stories of lives changed, impacts made as a result of the generosity of donors.

What I have seen from many churches is simply telling a financial snapshot.  They share how much expenses exceed revenue and tell people the need is for more money.  This is simply sharing information and it makes it about money and not mission. A college once shared with me the cost of the electric bill. This is not motivating to most donors, especially me. Sometimes, we share good information, such as we had 100 children participate in Vacation Bible School and this is good, but it can be better.  The church should stop sharing statistics and numbers and start telling stories of impact. Tell the story of the youth who helped lead Vacation Bible School and came to understand their God given gifts.  Tell stories of how pastoral care helped someone see God active in their life.  Tell the story of how Sabbath rest in worship renews people who feel beaten up by the world.

There will be some churches and church related organizations that struggle next year and they will blame the new tax law. If so, I hope they will have talked to their mid-range and upper-range donors to find out for certain that is what happened.  At the same time, I hope they will evaluate how they tell their story and take inventory of what God is doing through their ministry and how they communicate that.  I think storytelling is far more important than tax law.

To best position your organization and your most faithful and generous supporters to navigate this new tax code, consider implementing these steps as the new year begins:

  • In January and February have intentional conversations with 12-20 mid to upper range donors ($3,600 and up in most churches/$1,000 and up in most organizations). Ask them what the new tax law means to them. Together, determine strategies to help them. For instance, some donors may start giving every other year to lump their giving to take a deduction every other year. Being aware of their giving intentions will enable better financial planning for your organization’s leadership.
  • After the first quarter, evaluate each donor (or donors of a certain level or above), and check on how their giving compares to previous years (or their pledge). Contact any who are behind to encourage their continued support.
  • Evaluate the stories of impact that you share and determine that they are reaching your target audience.
  • Invite a few donors to share their intention to maintain or even increase their giving in the coming year because they love the ministry of the organization and feel it makes a difference. They can even state that the tax law is not a factor in their giving decision.
  • Provide prospective supporters a vision for more ministry that your organization can provide. People give to vision. Shrinking organizations normally get less money as donors become underwhelmed by the limited impact.
  • Encourage donors to give appreciated stock. They still avoid capital gains taxes

Ministry needs will continue to grow in the future. Most of the churches (over 60) and organizations (over 10) that I worked with in 2017 are expecting more ministry to happen in 2018 than in 2017 and I believe that they will experience that. Several churches are expecting 20% or more growth for ministry in the next year and givers have indicated their commitment to support this growth. While the new tax code has left non-profit organizations concerned about its impact on givers, I remind you that the tax bill was working through Congress as organizations made these plans and as donors made their commitments to support them. The needs addressed by these ministries and the donor desire to partner with them supersedes tax reform.

The world is changing around us but as we vision a world that God is active in, we can dream boldly and live into those dreams.

Contact Mike at ward@gsbfr.com

For information about the tax law itself, click here.

Click here to read an interesting article about the impact to giving.

Why accept less than the goal?

We raised more than $2 million but we were still 15% short of the goal. Should we accept long-term financing and just “suck it up” as missing the total need?

As we reached the final months of the appeal, rather than accepting less than what we needed, campaign leadership re-engaged our efforts.  We asked two members who chose not to give to the appeal for a challenge gift. One of them stepped forward with a $100,000 challenge gift for more contributions over and above what was already committed. A zero dollar donor to the original appeal became a six figure challenge donor!

Those who were generous to the original appeal were invited to extend their gift.  Those who didn’t engage the first appeal were invited to new or increased gifts. The entire congregation was engaged to reach what I consider “excellence” rather than accept a shortfall.

Rather than accepting anything but complete success has led this congregation to needing to inform donors what will happen with gifts in excess of the total need.  What a great way to enforce an abundance mentality.

3 Goals for Annual Stewardship

Congregations who contract with me to help them improve annual stewardship or to conduct a campaign typically have a laser focus on their goal: raise more money! Many are somewhat taken aback when I tell them we actually have THREE goals. Can you guess what those goals are?

  1. Of course we want to raise more money. We don’t seek increased donations to keep the lights on or to keep the coffee pot full. We want to raise more money so that we can continue doing ministry. Feeding the hungry, clothing the naked and housing the homeless cost money. If we are not about serving the marginalized and the disenfranchised, then why do we as the church exist? When we raise more money, we must tie that effort directly to the outwardly-focused ministry that is defined by the tagline “God’s work, our hands.”
  2. Our second goal is to grow generosity. Generosity must be taught, and it is taught not by criticizing those who we determine do not give enough. It is taught by making generosity a joyous activity, one that becomes as much a part of our spiritual life as prayer or service to others. Whether donors grow their generosity from giving $5/week to $10/week, or from $750/week to $1,000/week, celebrating that growth and sharing gratitude freely is key to making the act of giving something that donors want to repeat.
  3. The third goal is growing a willing volunteer base in our churches. Who are the regular volunteers in your congregation? You can probably name them. Most people do not volunteer at church because of nebulous task descriptions and never-ending assignments. When we ask people to serve as volunteers in our fundraising efforts, we provide a written job description as well as an idea of the time commitment. We also share the same gratitude and work to make their volunteer experience is satisfying enough that the next time they are asked to serve, they willingly step forward.

Amazing things happen when we don’t just focus on raising more money. When we marry the needs of donors with the ministry of the church, generational change occurs, and the church becomes something we do, not just somewhere we go.

Inspiring with more than an exclamation point!

I think the most important thing is securing gifts for ministry is to inspire people to want to give.  Answering the question “how will my gift advance the Kingdom of God” is critical in helping people feel that their gifts make a difference.

I think we often fail to inspire our donors and therefor they think we just want their money.  Sometimes we add an exclamation point to the end of a sentence that isn’t actually inspiring and we think people should be excited.

People want the money that they earn to make a difference.  If your cause doesn’t make a difference, they will either keep it for themselves or they will give it so someone else who will make a difference.  So, cast a vision for how gifts to your organization are critical in advancing your mission and your donors will be inspired to give more than you think you even need.

River Crossings

Imagine driving by a restaurant with this sign outside: We lose money being open on Mondays. Come eat and help us break even. Doesn’t that just make you want to go out to eat on a Monday night??

In order to increase business during their slow times restaurants appeal, not their bottom line, but to the self-interest of their potential patrons. They think, “What would appeal my customers? What would encourage them to come out to eat on the first work day of the week after a busy weekend?” This thinking leads to marquees that read things like $5 Burger Night and Free Pie Mondays. Cheap burgers? Free pie? I could be convinced!

Considering the customer’s standpoint changes the messaging from one of scarcity to one of possibility.

The same is true for congregations. In the middle of summer, most experience a dip in giving. As people head out of town for weekend activities, worship attendance goes down. Fewer people in worship translates to fewer dollars in the offering plate. Church budgets feel the pinch.

To address this challenge, many congregations offer their members some form of automated giving (many Lutheran churches use Simply Giving through Vanco). Congregations with larger percentages of automated givers have better cash flow during the summer months, easing the strain on treasurers as bills come due.

This leads to announcements like this (that I have heard many times in many places), “During the summer months we experience a shortfall of giving. Automated giving is a way for you to help your church! Even when you are out of town your donations will continue to come and help us meet our expenses. Please, won’t you sign up now?” It’s 100% true, but it doesn’t prove very inspiring. It focuses on scarcity and shortfall and not on God’s abundance. At the heart, this message sounds much like the first restaurant marquee. We lose money in the summer. Sign up for automated giving and help us break even. Not very inspiring!

A couple weeks ago I attended a congregation that came at this from a different direction. A video showed a couple who said, “We love this church and are excited to be a part of financially supporting a place where we can see God at work in powerful ways. We had a hard time keeping track of the checks that we put in the offering plate. Every time we’d come to worship we’d have to pull out the checkbook and look back to see when the last check had been written. Automated giving took those worries away. Now we can support our church on a regular basis without the worry and hassle of trying to keep track of it all. We love it.”

Considering the donor’s standpoint changed the messaging from one of scarcity to one of possibility. The focus remained on the ease of supporting God’s activity through the church and not on the lack of funds in the plate.

What message does your congregation convey as you seek to expand the rolls of automated givers? Do you appeal to scarcity and need or to possibility and abundance? Do you focus on what is good for the congregation or what is good for the donor?

Papa Geno

“They’ll never know his name.”

Many of us gathered in Blair, Nebraska to celebrate the life of Gene Meyer who passed away after years of valiant and faith-filled struggle with ALS. Gene was a fifteen-year associate with GSB and served many clients over those years. Prior to that Gene served as a development professional and executive in higher education, health care and social service agencies.

Gene Meyer

Gene’s son, Pastor Kevin Meyer, preached the sermon this day and he, along with his brother and sister, gave testimony to Gene’s joyous and energetic role as father and grandfather. A great day of remembering this fine man – though all of us are saddened and will sorely miss Gene’s bright smile, laughter and conversation.

During his sermon, Kevin provided us another dimension to Gene’s life. We were reminded that in Gene’s lifelong career as a fundraiser and nonprofit leader, he left his mark and his work put in place strong ministries and funding that have touched tens of thousands and still continue to do so even now, as Gene has left us.

The money that Gene raised, the counsel he provided to assist others in raising money, the organizational coaching that he did with so many and the kind and effective encouragement he provided to volunteers has been multiplied many times over. Gene will continue to touch people for years to come in this way but “they will never know his name.”

That is the work that we, who serve with nonprofits in many different roles, are engaged. We really are change agents in society and bring about answers and solutions to problems across our country and the world. And, for the most part, those we touch will never know our names. That’s okay, isn’t it?

The following statement is attributed to many – I will attribute it to President Harry Truman: “It’s amazing what you can accomplish when you do not care who gets the credit.”

A good mantra for our work and for our lives, don’t you think?

Abundance

Was I really, in a gathering of congregational leaders? On Tuesday, February 7, 2017 I had to ask myself that question.

We had gathered to evaluate the results of the fall, 2016 stewardship campaigns of the twelve congregations that had covenanted to walk together through the program we call Stewardship for All Seasons. I knew the program would lead to growth. I was overwhelmed at what I was hearing.

My previous experience as congregation leaders gathered to talk about financial giving was a focus on scarcity. There was lamenting about layoffs, cutbacks, and mission going unfunded.  Without exception on February 7, 2017 that was not the story!

Two congregations had members pledge more to the ministry for the next year than the total giving for the previous year without consideration of the non-pledging households.  Several congregations experienced numerous givers who had provided gifts of less than $5 per week in 2016 who pledged $30, $40, or more per week in 2017. Three congregations saw pledged revenue increase more than 22%.  Four congregations experienced the number of families pledging increase by more than 20%.

Mission support, that is gifts from these congregations to their judicatory increased by at least $30,000 for the coming year.  Mission support from these same congregations had been on a downward trajectory in the years prior to our work together.

These congregations exceeded their goals.  They far exceeded my expectations.  What had been a scarcity mentality for the church was now being described in terms of abundance and significant ministry into the future.

I was in awe.  This was a vision I had hoped for.  This year, I was blessed to see it become a reality, at least for these 12 congregations.

We do have a God of abundance.  With vision and quality work, we can live into that abundance.  What a blessing this was to hear about what God would be able to do through these congregations in the year ahead.

Mike Ward

 

Mike Ward
CFRE, M. Div., Partner
Click here to view my GSB website

Out with the Old, In with the New

Whether personally or professionally, a new year often includes new strategies and new goals. We’re a predictable lot: always looking for the new, shiny, quick fix from health and fitness to fundraising—seeking strategies which will magically realize our new goals with little effort and great rewards.

There’s always more data to research, more social media to engage, a new generation to court. And the chase is on—trading tried-and-true practices for glitzy new gimmicks. Don’t misunderstand; there’s a valuable and necessary place for testing and implementing new strategies in your fundraising program. Data research should be conducted; implementing social media strategies and engaging new donors are important elements to an effective fundraising program. They key is maintaining a healthy proportion of known successful strategies while exploring new strategies.

Now that the year has turned, and by now your books are closed, it’s time to review your fundraising results from last year.  Did you gain first time donors? Did you retain previous donors?  Did your donors grow in their average gift size, or number of gifts? Celebrate your successes, and mark your challenges.  Let this review inform what strategies you consider in the year to come.

Good fundraising programs test new strategies and methods in tandem with long-known practices of fostering donor-centered relations which build financial support through well-developed and inspiring stories of mission and outcomes.

In this new year, continue to develop the strategies which have shown to be successful in your efforts: personalized engagement, clarity of message, responsive and transparent reporting of outcomes. Build on the relationships of those who already support and encourage your organizational mission. Then, based on your results from last year, intentionally incorporate new strategies which support your current plan and don’t monopolize vital resources of time and finances. It’s the key to sustainable long-term growth of your fundraising efforts.

Jennie Wolf Smith

For information on how GSB can help to kick-start your planned and deferred giving efforts with a time- and cost-effective plan, contact me at Jennie@gsbfr.com.

5 Keys to Congregational Capital Campaign

Having been through my share of capital campaigns, including some I led myself in my own congregations, I have developed a set of keys to helping such campaigns be successful. One of those is “don’t do it yourself!” That’s my first key.

Yes, I realize I just said that I had done my own but I definitely don’t recommend it. There are several reasons. One of the most important is that as a pastor you are most likely simply too busy to dedicate the time a really effective campaign needs. Capital campaigns are intensive and demanding. They aren’t something you can just whip out in your spare time.

Another reason for not doing itself is that most of us don’t have the expertise. That’s where a professional comes in. Those who work in the development field have training and experience. They have learned the “dos and don’ts” of a campaign. In addition, since this is what they are paid for, they have the time. This means a “key” key is to get outside, professional help. And one more reason is that sometime the outside professional can take the “heat” that might otherwise go to local leadership. Capital campaigns can generate some controversy. If so, how nice is to to direct that to this person the congregation has retained.

Almost as important is a second key which is simply involving as many people as you can. When there is widespread involvement throughout the congregation there also tends to be widespread understanding and support. A capital campaign is a good place to involve dozens, even a hundred or more, people in a variety of roles from preparing treats or meals to serving on the main steering committee.

Yet another key is to allow plenty of time for planning the campaign. Frankly, a year is not too long. One reason for a lengthy planning time is to get the “buy in” of the congregation, beginning with its leadership and ultimately reaching as broad an audience as possible. All of that takes time as does the recruiting of leaders and communicating the mission. A campaign can be done in six months. I did one once for a congregation in two months! But a longer period of time is generally a good thing.

A fourth key is to have a very carefully developed case statement. Such a statement sets of vision and the rationale for the campaign. Why are we doing this and what will it accomplish? The case statement needs to be clear and concise as well as motivational. This is not a good place to try to answer all the questions. That can be done in an “FAQ,” or “frequently asked questions” document. Along with a case statement, an FAQ is also of key importance.

While there are more keys to a full “set,” a fifth key I will mention in this brief article is having strong communication materials. Too many congregations or organizations skimp at this point. What is called for are materials professionally prepared and produced. Many congregations have people with training and experience, maybe even equipment, to help with communicating effectively. But also don’t hesitate to spend what it takes if, for example, you want a fine video. Typically that isn’t something with a small home camera can do. Hiring a professional, while not cheap, can make a world of difference.

It is amazing how many keys most of us have. So, too, there are quite a number to conduct a successful capital campaign. Now you have in your hand or pocket, a few such keys.

Gary F. Anderson

 

Gary F. Anderson
Associate

3 Reasons to Improve Your Endowment Program Now

Endowment programs have nearly always taken a back seat in non-profit organization fundraising programs, and the economic squeeze of the last decade adding to the urgency of annual funding for current programs has pushed conscious efforts to secure deferred and estate gifts further out of view.

Regardless of the size of your organization—be it big or small, if intentional cultivation of planned gifts isn’t part of your on-going fundraising strategy, you’re setting up your organization for perpetual financial struggle.

It has been suggested that as much as 50% of future contributions to non-profits may come from gifts planned years before (Greenfield, 1999). Few organizations can afford to pass on this financial support, and none would want to.

There are many reasons to improve your endowment program now. Here are three:

  1. You don’t have to be an estate tax specialist.

In our current philanthropic climate, it’s possible that securing estate gifts has never been both easier and more complicated at the same time. Access to information and education for potential donors has never been more plentiful while the host of charitable vehicles and ever-changing tax codes can intimidate even the most seasoned gift officers.

The good news is that there are financial advisors and tax specialists available to help when a donor is ready to make such a gift. In fact, we strongly recommend gift officers direct potential planned gift donors to seek out third-party financial and tax advisors to ensure gifts made to the organization are in the interest of the donor, and avoid the perception of coercion or other impropriety. Establish organizational policies and procedures to receive these gifts, and leave the gifting technicalities to the estate professionals.

  1. For some donors, giving later may be easier than giving now.

Donors who are conscientious about economic uncertainty, or who are anticipating financial transitions (i.e., college-bound kids, a pending retirement, a future inheritance), may have limited resources today, but can more easily support the organizations they care about as part of their estate. Even a small percentage of an estate can have a significant impact on your organization and create a legacy for the giver.

Raising awareness among your faithful supporters that your organization is prepared to receive and manage deferred gifts instills confidence in donors that their donations will have an impact for years to come.

  1. Despite immediate financial pressures, the organizational mission is about the long-view.

For donors and organizational staff alike, it’s common to feel the pressure of immediate needs around budgets, facility maintenance and program funding shortfalls. Deferred and estate gifts help transition responses from reactive to proactive—a healthier and more productive way to carry out the organizational mission.

Endowments create financial resources for those same needs in the years to come, while also inspiring supporters, board members and employees to think about how needs and mission may develop in the future in response to cultural and environmental trends.

If your organization has suspended in endowment fundraising efforts for more urgent funding demand, it’s time to reallocate your strategy. Don’t have an endowment program in place? It’s time to start!

Jennie Wolf Smith

For information on how GSB can help to kick-start your planned and deferred giving efforts with a time- and cost-effective plan, contact me at Jennie@gsbfr.com.

 

 

 

Reference
Greenfield, J. (1999). Fundraising: Evaluating and Managing the Fund Development Process. 297.