The Fiscal Cliff Deal and Your Non-Profit: Moving Forward with Practical Advice and Action

Contributing writing by RSC Senior Consultant Jeremy Hatch, cfre

Welcome to 2013! Less than a week into the New Year and already our world is changing with some mixed news from

Your Donors Can Make It!

Congress. Over the past few months, many RSC clients (along with board members, volunteers and donors) have expressed concern and fear about changes to tax law in 2013.  Some donors have stated that they will likely not be able to give with the same fervor as they once did because of the impending changes. 

Before donor-paralysis sets in, let’s look at what we know so far, based on the agreement passed by Congress on January 1:

  • Tax deductibility of charitable gifts: The agreement does not include (as feared by many) any “across the board” limit or cap on the deductibility of charitable gifts for 2013 but rather places a cap on itemized deductions for some families earning more than $300,000 per year, or some individuals earning more than $250,000 per year. It is a somewhat complex calculation but shouldn’t have a significant impact on the vast majority of our donors.  click here for an excellent sample scenario, provided by the League of American Orchestras
  • IRA Charitable Rollover continues for 2013: In happier news for the non-profit community, this popular giving vehicle has been reinstated and allows donors who are 70 ½ or older the option to make charitable gifts directly from IRA accounts. The measure is retroactive to 2012 (giving donors the opportunity to make a 2012 gift via this vehicle if completed by January 31, 2013).

Most non-profit organizations are asking about what these changes mean.  How should you prepare, react and respond?  Is your current Annual Fund program affected?  What about planned gifts?

In response, RSC says, “Slow down, take a breath and initiate some practical steps that will encourage your donors to continue being generous:

  • Step #1—Stay the course. There may be bigger changes ahead in future years with our tax code, but for 2013 the tax benefit is unchanged for the vast majority of your donors and prospects. It is vitally important to stick to your solicitation plan and calendar. The development committee needs to keep focused and your direct response plans should proceed without delay.
  • Step #2—Communicate the facts to your board and volunteers: Let your key volunteers and solicitors (especially those who expressed concern last fall) know about these changes and coach them through talking about the issues with prospects and donors.   
  • Step #3—Communicate with your donors: The IRA rollover has proven very popular in recent years as a giving vehicle. Strategize internally about prospects who might be a good fit for this opportunity (older donors with pending major gift pledge payments, etc.) and consider a custom communication in the coming weeks and months to market this opportunity.
  • Step #4—Make it personal:  For a small percentage of our donors and prospects, this situation might be a disincentive to invest in your non-profit’s good work. This is all the more reason to cultivate donors personally via peer-to-peer activity. If one of your key donors has slightly less to give away in 2013, you had better realize they will make a meaningful investment where they feel best connected, most appreciated, and personally invested. Make sure it is to you.
  • Step #5—Stay engaged with RSC:  Growing your fundraising capacity for arts and cultural organizations is our business, regardless of the external factors. We can offer strategies, counsel and practical advice. Together we can make 2013 your year to achieve Fundraising Growth Now!

RSC believes that one key to success is to continue communicating with your patrons in times of celebration, success, struggle or uncertainty. Mailing information can be helpful, but personally reaching out and talking with your most vested stakeholders is paramount.  Always be ready to encourage them to continue their support and always direct them to their financial advisor to deal with specific situations.  If you haven’t reached out to your patrons regarding the tax changes, do it today.

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