#GivingTuesday was huge, but major donors are set to make record-setting charitable gifts before 2018, thanks to pending tax reform and a soaring stock market.
#GivingTuesday on Nov. 28 was an extraordinary fundraising event for nonprofit organizations—from community groups to international charities— with charitable giving totaling over $274 million.
But, believe it or not, better news for nonprofits may be coming during this holiday season before the clock turns to 2018. This is particularly noteworthy, because charitable giving in 2017 was down in three consecutive quarters compared to 2016.
While it’s not a social phenomenon like #GivingTuesday, traditionally, the end-of-year period provides a substantial source of income for charities: December alone accounts for upwards of 25 percent of total donation activity for the year. And the last week of the month becomes a philanthropy sprint, representing up to 40 percent of December giving alone, according to DonorPerfect.
Projections for December look even higher this year, giving the nonprofit community a reason to anticipate a joyful holiday season. The drivers for this optimism? Tax reform legislation, all-time stock market highs and an engaged population of major donors that have been largely absent during the year.
Given this scenario, community groups and nonprofit organizations still have time to get the word out to their donor communities and inspire them to contribute. Here’s what they need to know.
Tax Reform Creates Opportunity
Without getting too technical, proposed tax reform legislation has significant tax implications for future charitable giving. One of the proposed tax changes around doubling the standard deduction should motivate mid-level donors to make charitable gifts before the end of 2017, as opposed to giving next year when these donors will no longer itemize donations.
Another tax change proposes lower corporate and “pass-through” business tax rates that will create incentives for corporations, small business owners and major donors in the highest tax brackets to give before the end of this year. If they donate now, they will enjoy a higher deduction than next year.
Use Stock Market Gains as Charitable Gifts
Record-highs on Wall Street should spur donors to give appreciated stock as a charitable gift; the nonprofit organization realizes the full value of the stock, and the donor avoids capital gains tax on the appreciation.
We saw this formula in 1986: A soaring stock market and looming passage of the Tax Reform Act of 1986 spurred a surge in end-of-year giving, as described in a New York Times article from that year.
A More Engaged Donor Community
Following on the heels of the record-setting #GivingTuesday, donors are more engaged than ever. According to the data experts from Datakind and supported by the Bill and Melinda Gates Foundation, the $274 million raised on #GivingTuesday this year was up 50 percent over last year. Instead of these higher charitable contribution hindering end of year giving, history tells us it may stimulate more end of year contributions.
The Takeaway for Nonprofit Organizations
Many nonprofits have scrambled to engage donors who have largely held back from major gifts thus far in 2017. At this time of year—and especially this year—education is key.
The year is ending quickly, but since the last week of December is the best week of the entire year for donations, there is still time! Nonprofits need to educate and motivate donor communities to support their mission. Donors will benefit by paying lower taxes this year and realize personal gains that cannot be measured by money alone.
It’s a win-win-win situation for donors, nonprofits and the constituents they serve during this joyous time of year!
Jon Biedermann is VP of Fundraising Products for SofterWare and has served the nonprofit community for more than 20 years in leadership roles on major nonprofit organizations and foundations including:
- Executive board member: The Giving Institute and board member, The Giving USA Foundation
- Founding member: Fundraising Effectiveness Project, a program of the Association of Fundraising Professionals
- Founder and steering committee member: The Growth in Giving Initiative, a program of the Association of Fundraising Professionals Foundation and the Urban Institute