Millions fewer Americans are expected to take write-offs for their charitable gifts when they file their returns for 2018. The new tax law doubles the standard deduction — so most people don’t need to itemize any of their spending.
That means they have no special incentive to donate to charity, as they did in the past.
But that won’t stop many nonprofits from following the time-honored practice of reminding donors in year-end appeals that gifts made by December 31 can be deducted to reduce donors’ tax bills.
Most fundraisers agree that appeals meant for big donors should probably still include notes about the tax benefits of giving because most wealthy donors will continue to benefit from charitable deductions.
Still, the tax changes prompt a question for appeals aimed at smaller and medium-size donors: Does it make sense to talk about tax deductions that most of them won’t claim?
A Noble Cause
Even before the tax changes, some fundraisers and philanthropy experts disliked noting tax benefits in fundraising appeals. Such references, they contend, make solicitations feel like they are only about financial transactions rather than about doing good. “It’s a cheap way of approaching something that’s otherwise very noble,” says Doug White, a fundraising expert and philanthropy adviser.
More than that, White argues that such notes about tax deductions have always been disingenuous. Even before the tax changes this year, only about 30 percent of taxpayers itemized their donations annually and thus got a tax deduction for giving. Under the new law, the percentage of people claiming deductions for gifts to charity will fall to an estimated 9 percent, according to the Tax Policy Center.
By including such language, some charitable supporters might believe they are getting a tax break for their donations when they really aren’t. “As an appeal, it’s very tawdry,” he says.
Differing Views
Some charities say they’re likely to remove language about tax deductions from their year-end appeals this year — or they’re unsure how much they’ll mention taxes.
American Rivers, a national conservation group, will stop noting taxes in its appeals to midlevel donors — those who give $1,000 to $10,000 annually — many of whom may no longer deduct their charitable gifts, says Karyn Bryant, a fundraiser at the organization.
But, unlike most charities, Bryant says, American Rivers also plans to stop mentioning tax benefits in appeals meant for donors who contribute more, too, because she doesn’t want to dilute the message about the organization’s mission to protect river basins across the United States.
“I wasn’t a huge fan of that language [about taxes] to start with, so the tax law just made it easy to think about removing it,” she says.
PEN America, an organization that seeks to protect free expression, is debating how much it will talk about tax benefits in mass appeals this holiday season, says Deborah Wilson, senior director of development. In her view, the language likely isn’t relevant to people who give small contributions.
“I prefer to think people give to charities because they choose to support something that they believe in,” she says, and not because of the tax write-off. Still, some of her colleagues at PEN America think donors are used to seeing such language, so it should remain in most solicitations.
The organization, which is still crafting its year-end appeals, plans to focus mostly on the charity’s mission, she says.
It plans to test appeals with and without mentioning tax deductions, Wilson says, to see which work better.
Not Misleading
Though many fundraisers agree that tax benefits should never be the focus of an appeal, they don’t think it’s a problem to note them in year-end appeals.
Some say plenty of donors who get mass appeals will still itemize because their overall giving and other spending eligible for write-offs is higher than the standard deduction of $12,000 for individuals and $24.000 for couples. That makes reminders about deductions relevant for them, says Joe Manes, senior vice president of ABD Direct, a company that helps charities raise small and medium-size gifts through mail and digital appeals. Besides, Manes suspects that most donors are educated enough about tax issues that they’ll know if they intend to deduct their gifts — regardless of the language included in fundraising appeals.
“It’s not as if we’re pulling a tax bait-and-switch,” he says.
Still, Manes says his clients’ notes about taxes in their year-end campaign appeals may say that deductions are available only to those who itemize — so it’s clear who will benefit. “We don’t want to be misleading,” he says.
A Goal and a Deadline
Most fundraisers and experts agree that reminders about tax deductions aren’t the most important messages to push at year end — including Manes.
“Frankly, I don’t know how huge of a motivator it is,” he says, pointing out that even 501(c)(4) social-welfare nonprofits that he works with raise lots of money during the holidays — despite the fact that gifts made to them are not tax deductible because they are allowed to engage in partisan politics.
Touting an organization’s mission is the most important aspect of appeals in year-end campaigns, says Will Valverde, creative director at M+R, a firm that helps nonprofits with their online appeals.
“It’s really important to make sure that you are communicating in a way that’s compelling to your audience — that really shows the value of the work that you do,” Valverde says.
Organizations can create a sense of urgency at year’s end by promoting matching gifts and emphasizing that nonprofits have fundraising goals to meet by December 31. The pieces needn’t hinge on the deadline for a tax write-off, he says.
“The combination of a goal and a deadline: Those are the two big ingredients that create urgency,” he says.
Motivated by Mission
The Fistula Foundation — which aids women in poor countries who suffer from an injury that leaves them incontinent after childbirth — says it hopes to do just that: use matching gifts at year end and note in appeals that the more money it raises by December 31, the more people it can help in 2019, says Jessica Love, a communications consultant who works closely with the organization.
“It is helpful for donors to have a deadline of some sort,” Love says.
Though tax deductions have never been a big part of its message, the organization may mention them even less in its 2018 year-end campaign, Love says.
Many of its donors — who give $200 on average — are probably not motivated by tax incentives, she says: “Most people really are giving because they believe in what we do and they want to help the women that we’re working to help.”
Some groups say they’ve never pushed hard on taxes at year’s end.
The American Heart Association, for instance, will continue with the same playbook that’s been successful in the past: highlighting its work in appeals during the holiday season, when Americans are most generous, says Suzie Upton, chief operating officer. She says: “We’ve always led with the mission,” noting that tax deductions have never been a big focus of its messages to donors, who give less than $60 on average.
Manes says he doubts that fewer people — especially donors of small sums — will give this holiday season solely for tax reasons, despite an estimate showing that donations will drop by about $16.3 billion because of the tax overhaul.
“I do think people are in the habit of giving at year end,” Manes says. “It’s in the air.”