End-of-year giving in the face of the new tax law

Todd Levy

Todd Levy

Co-founder and CEO

2018 is a challenging year for nonprofits. For years, many nonprofits relied on the tax-break that itemized deductions gave to most supporters. Now, the end-of-year ask feels naked without it. We’re already seeing the effect of the new tax law: According to the Chronicle of Philanthropy, fundraising revenue is down 2.1% for the first half of 2018. When you factor in a 1.9% inflation rate, that’s at least a 4% drop over revenue last year. By year’s end, this loss is likely to be even worse.

I’m not here to paint a bleak picture though. There are many things that nonprofits can do between now and the end of the year to help recoup those vital dollars.

What to do right now

Here are four tactics that every organization should do immediately:

  1. Make the ask now. Frankly, the sooner that you get the donation, the less risk you have of never getting that donation at all. The end-of-year ask has become so focused on December 31st, but you can’t wait until then and find that money is not there anymore.
  2. Write off the tax-break donors. Those who gave exclusively for the tax break have been gone since the end of last year. Don’t waste your resources trying to get them back. You’re still going to get substantial year-end dollars, but the donors who will give those never gave because it benefited them financially.
  3. Rally your most passionate supporters. Many nonprofits are already painfully aware that they’re facing a shortfall this year. The biggest advocates among your supporters are the ones most likely to rise to the occasion and make up that difference. The message should be: “Hey, we need your help. Here’s why we need it: This money's not going to be here for us anymore...” Also, remember that some of your largest supporters still may have tax advantages in giving.
  4. Ask for donations in the first quarter of 2019. Remember that many of your supporters will be seeing a bigger refund next year as a result of the new tax law. Use that to your advantage and make the ask to get them to do good with part of that windfall.

What to do for the future

It’s time for all nonprofits to think in terms of future-proofing their mission. Here are the two most important steps to take:

  1. Change your ask. As a long-term strategy, take the opportunity to refocus your ask. Your message should be a positive one that talks about your mission and the success you’ve made towards your goals. Give evidence of this success with statistics that show exactly what good a donated dollar does. Tell stories across media and channels that show the happy endings you’re helping to create. Your ask should be powerful enough to not just motivate your advocates, but also create more advocates.
  2. Leverage peer-to-peer fundraising. DonorDrive has many clients that each raise millions of dollars on our platform. Therefore, we know how powerful the emotional appeal of supporters asking their networks can be. The emotional ask is ubiquitous. It’s year-long, not just on December 31st. People who give to their friends through peer-to-peer events and campaigns have never done it for the tax break, so this type of fundraising has always been insulated from that problem.

Peer-to-peer turns donors into fundraisers

As every nonprofit migrates to online giving, they’re finding it’s a logical step to migrate their donors to fundraisers through peer-to-peer. While the average peer-to-peer donor gives between $25 and $150, each fundraiser brings multiple donors with them, typically for multiple years.

We did some research recently on long-term participants in peer-to-peer events like runs, walks and rides. What we discovered was supporters who did the same event for six years, raised an average of $4,425 over that time. By year six, they were raising twice what they did in year one, so their impact doubled. These fundraisers also gave to their own peer-to-peer campaign, which totaled 15% of what they raised.

DIY helps turn fundraisers into advocates

We also know that many supporters are looking for further opportunities to support your organization. DIY (Do it Yourself) fundraising has proven to be one of the best tools for this. When a supporter can’t make the nonprofit’s run or virtual event, we’re seeing them do a DIY campaign in its place. Some supporters might find organized events don’t fit their lifestyle and DIY gives them the freedom to express their passion for the nonprofit.

I don’t think nonprofits should look at DIY as only a fundraising activity: it’s also a strategic opportunity to continue having people involved with your organization. It’s helping grow more advocates.

In light of the new tax law, it’s becoming obvious that a current and future requirement for nonprofits is they’ll have to ask more of their current supporters. While there’s the fear that you’re already asking your biggest advocates for too much, we’re discovering that they’re the ones always willing to help a little more. Make sure you’re giving them the tools to do that.

Ready to explore how DonorDrive can help you?