Top Ways the Tax Law Impacts Nonprofits

TGRC Tax presentation

Timothy A. Clark, Managing Director UST and Wealth Strategies Advisor at U.S. Trust speaks to nonprofit professionals at the Texas Grants Resource Center

Many of the changes to the federal tax code (passed at the end of 2017) have taken effect this year. This month, the Texas Grants Resource Center (TGRC) had a primer on how these changes might influence the work of nonprofit organizations.

Timothy A. Clark, Managing Director UST and Wealth Strategies Advisor at U.S. Trust and Amber Carden, Senior Vice President and Private Client Advisor at U.S. Trust/Bank of America Private Wealth Management spoke to nonprofit professionals at the TGRC to help guide their mission-driven work through the maze of tax changes.

Some of the top tax law changes that might impact nonprofits are:

  • The adjusted gross income limitation on cash contributions to public charities, including donor advised funds, was increased from 50 to 60 percent;
  • Standard deduction increased from $12,700 to $24,000 for those filing Married-Joint;
  • Pease limitations were repealed (phase-out of itemized deductions no longer applicable).

Will these changes lead to more or less charitable giving? Conventional wisdom suggests that an increase in the standard deduction (for example) means fewer people will itemize deductions, meaning fewer people will be able to take the federal income tax charitable deduction.

However, Americans have been making charitable gifts since before there was even a tax code. Also the data shows that Americans give to nonprofits because they are charitable (not necessarily for a tax incentive). This was one the biggest take-aways from the presentation: nonprofits should keep appealing to donors’ sense of going good – this sense is generally a higher motivator than tax incentives.

 

 

Image: Erler

IMPORTANT:  This presentation is designed to provide general information about ideas and strategies. It is for discussion purposes only since the availability and effectiveness of any strategy are dependent upon your individual facts and circumstances. Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax, or estate planning strategy.
 
Advertisements

How Can Nonprofits Best Use Facebook?

Facebook at TGRC Sept 2018

On September 25th Veronica Peñaloza Wolfermann, Facebook Account Manager for nonprofits spoke to a group of nonprofit professionals from Texas Grants Resource Center

Social Media is a great way to get the word out about the work of your nonprofit organization. Facebook offers so many options for nonprofits: from outreach to fundraising. On September 25th, 2018 Veronica Peñaloza Wolfermann, Facebook Account Manager for nonprofits spoke to a group of nonprofit professionals from Texas Grants Resource Center about how best to use Facebook for the good of the community.

Here is a selection of some of the info, tips and hacks that Veronica described:

  • There are currently 2 million nonprofit pages on Facebook
  • 150 million people are connected to a nonprofit page on Facebook
  • If a nonprofit wants to get verified with Facebook this is the link to start: facebook.com/donate/signup
  • Also it would be wise for a nonprofit to be registered and up to date with GuideStar
  • Facebook will be participating in a coordinated effort for #GivingTuesday (this year it is November 27th)
  • 100% of donations made through Facebook payments to nonprofits now go directly to those organizations
  • Suggestion: if you have an influencer who supports your nonprofit, ask that influencer to add a ‘donate’ button to a Facebook live video
  • Some nonprofits that use Facebook well (to look at for examples): St. Jude Children’s Research Hosptial, Pancreatic Cancer Action Network, Save the Children.
  • If a nonprofit has a donate button on a Facebook live feed, there is 10 times more engagement than other “non video” donation posts.
  • Nonprofits can set up mentorships if their page has a group
  • When deciding what to post on your nonprofit’s page, always ask: “will this translate into donations, volunteers or other support?” If the subject is not aligned with the nonprofit’s mission, the post probably won’t help much (even if it gets a lot of likes).

Here is a link to some of the Facebook offerings that Veronica described. Here is a link to info about future Texas Grants Resource Center presentations.

 

 

 

Image: Erler

 

Relationships with Foundations

Erica

Erica Ekwurzel – Presenting at the Texas Grants Resource Center

On June 8th, 2018, The Texas Grants Resource Center’s Nonprofit Partner series featured Developing Donor Relationships with Family & Private Foundations, presented by Erica V. Ekwurzel, CFRE. Erica shared tips from her experience leading and supporting family and private grantmakers.

Here are some of the top take-aways from the TGRC session:

  • When it comes to applying for grants – don’t do “mission drift.” Don’t lose sight of your mission by chasing grant funding that reflects the ideas of others;
  • Review and proofread all applications;
  • If you know one foundation…well, you know one foundation.
  • Make sure that the application you send is purposeful and intentional;
  • Have data to support your proposal.

For more information on presentations by the Texas Grants Resource Center, visit Texasgrc.org.

 

Image: Erler

Nonprofits: Forget About “Better Late Than Never”

Last week the Greater Good Geek blog focused on nonprofit researcher Penelope Burk’s findings. This week “The Geek” will highlight another of Burk’s ‘best practices’ in writing thank you letters to donors – which can be summed up in two words:

Be prompt.

Burk conducts surveys of those who donate to nonprofit organizations. Getting a prompt thank you note is something donors do expect. Burk’s research on thank you letters, by the way, culminated in a list of the 20 Characteristics of Great Thank You Letters which was published in Burk’s Donor-Centered Fundraising.

But donors’ expectations is just one reason to be prompt. Another reason comes from the IRS. They state that a donor is required to “keep a contemporaneous written acknowledgment for a charitable contribution.” That key word – contemporaneous – essentially means “be prompt.”

Mentioning the IRS is always a good excuse to point you to their handy Charitable Contributions Guide for Tax Exempt Organizations. “The Geek” suggests having this guide at your fingertips and reviewing it periodically.

So because the Greater Good Geek is always looking for fun ways to remember nonprofit best practices, here is a haiku poem to remind you of this important thank you note element. Have a great #HaikuTuesday as well!

10 Haiku Tuesday

 

One proven tip for thank you notes to donors

Nonprofit researcher Penelope Burk has written extensively about fundraiser best practices, including “donor-centered thank you letters.” Today’s “Greater Good Geek Nonprofit Haiku Tip” focuses on one of these proven tips for a great thank you note. In fact, here is more info on and the citation for Burk’s research (check out number 9 – the inspiration for today’s poem).

9 Haiku Tuesday

Are your donations wasted?

You have made cash donations to charities. You have probably thought about how those nonprofits are spending the dollars you give. But you trust them to use your donation wisely (otherwise you probably would not have given).

Landscape

In your mind, you might picture the organization using your money to buy cans of soup or bandages or other items to help those in need. How would you feel if your donation was used to buy advertising for the charity, to pay for the nonprofit’s fundraising activities or for other ‘overhead’ costs? Would you feel your donation was wasted?

Overhead Costs

There are two conflicting opinions on the question of overhead. Briefly summarized, they are:

  1. The less a charity spends on overhead costs, the better
  2. A nonprofit’s effectiveness at solving problems is more important than the amount it spends on overhead.

Charity Watchdogs

There are a number of charity watchdog groups that help people decide how to donate their money. Charity Watch is one such group that takes the first position (the less a charity spends on overhead costs, the better). In fact, a nonprofit’s spending is a big factor in the rating Charity Watch gives. If a charity spends 36% or more on overhead costs, that organization will receive an efficiency grade of C+ or lower (all the way down to an F).

Charity Defenders

A number of people and organizations are starting to speak out on the other side of the “overhead” question. The founder of the AIDS Ride and self-described “Charity Defender” Dan Pallotta gave a TED Talk (that garnered over 3.5 million online views) supporting the second opinion (A nonprofit’s effectiveness at solving social problems is more important than the amount it spends on overhead).

In this TED Talk (titled “The way we think about charity is dead wrong”) Pallotta says “…the next time you’re looking at a charity, don’t ask about the rate of their overhead. Ask about the scale of their dreams, their Apple-, Google-, Amazon-scale dreams, how they measure their progress toward those dreams, and what resources they need to make them come true, regardless of what the overhead is.”

Define “a wasted donation”

This is a fascinating debate, and I encourage you to visit Charity Watch’s web site to see how they calculate their ratings and I encourage you to take a look at Dan Pallotta’s TED Talk to hear more about his experiences and thoughts about overhead. Taking a look at these positions may even change your definition of a “wasted donation.”

14797260413_879388a8cb_m

My position on this is closer to Pallotta’s than to Charity Watch’s. Although it makes my stomach hurt to watch reports on 60 Minutes about charities that abuse the trust of donors by pocketing donations for the personal benefit of the administrators instead of serving those in need, I think that a Charity Watch-type black and white grading system is not the solution. How a nonprofit achieves its mission is a nuanced road – and as Pallotta points out, there are some “unwritten” rules that need to be rethought. I believe, for example, that one “rule” is that grant funds should not be given for overhead costs. As a grant writer, I have seen this rule backfire. I have seen, too often, a nonprofit decision-maker hope that creating a new (and unneeded) program will somehow obtain a sliver of funding for vital overhead costs. Trying to “game” the system in this way demonstrates that there are many “unwritten” standards constraining the work of nonprofit organizations. And if a nonprofit is constrained, how can it achieve its mission?

Questions: What goes into your decision to make a donation? Have you consulted Charity Watchdog ratings? If so, what did you think?

Images: U.S. National Archives, Internet Archive Book Image