Why Now Is the Best Time in History to Launch a Capital Campaign or Major Fundraising Initiative

In today’s economic climate, there are three macroeconomic factors that are all occurring simultaneously, creating a once-in-a-lifetime opportunity — scratch that — once-in-history opportunity for nonprofit organizations and donors to launch a capital campaign or any major fundraising initiative.

This trend is based on three unique factors from Cerulli Associates: economic prosperity, a tax code that favors major gifts from high-net-worth individuals and the projected $68 trillion wealth transfer. These three factors overlapping offer a rare opportunity for institutions and donors to solicit campaign gifts in the form of cash donations, planned gifts or a blend of the two. This is crucial for the success of capital or growth campaigns because donors now have access to more forms of capital than ever before, making it easier to make transformational investments.

With that in mind, let’s dive deeper into each of these factors:

1. Economic Prosperity

The last 10 years were prosperous for both investors and businesses. The stock market continues to roar, and those who are invested are growing their portfolios as well. These economic growth conditions have led for many to higher disposable income and provided high-net-worth individuals with the means to give more. Data analysis indicates that on average, individuals give 1.9% of their disposable income to charity. As overall wealth increases, the size of philanthropic donations increase proportionally.

For example, 2017 and 2018 was the first time giving reached over $400 billion. This philanthropic milestone was largely influenced by a strong economy where we saw a 5% increase in disposable personal income and 5.2% growth in the GDP. That said, charitable giving accounted for 2.1% of gross domestic product in 2018.

These numbers alone show us the direct correlation between economic prosperity and philanthropy — as the economy grows, so does the strength of philanthropy. This upward trend in economic prosperity has given donors the opportunity to make transformational gifts and as a nonprofit organization, you now have the chance to elevate your campaign goals exponentially.

How do you do that? We have been advising our clients on new tools and tactics to elevate campaign goals through a blended gift approach that incorporates both discretionary (cash) gifts, as well as the ability to amplify their gift through gift-planning mechanisms. We are finding that donors are thinking about legacy, and smart entrepreneurs are interested in financially engineered approaches to their philanthropy, whether that be using life insurance programs, donor-advised funds, charitable remainder trusts or the more traditional bequest strategies. Creative approaches such as these, coupled with the current economic growth conditions, can have a tremendous impact on your organization and long-term sustainability.

2. Tax Law

The new tax law removed many of the deductions, like state and local taxes, mortgage interest, etc., and donations are one of the few deductions left. While it is debated, this new tax law favors major gifts over smaller gifts as the standard deduction applies to those who are deducting (for a married couple) more than $24,000. On average, high-net-worth individuals gave $29,269 to charity in 2017, according to the "2018 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households." By comparison, general population households gave $2,514 on average.

“With the elimination of many of the other deductions, donations are one of the most efficient ways to reduce your taxable income.” — Geoff Brown, Withum

And although fewer donors will be able to enjoy the tax benefit of itemizing their income tax charitable deductions, there are still tax-efficient ways high-net-worth individuals can give to your organization. Again, by thinking creatively, you can encourage high-net-worth individuals to give through gifts of appreciated property, IRA rollovers, estates and retirement plans, among other sophisticated giving vehicles.

3. Wealth Transfer

Baby Boomers have accumulated more wealth than any other generation in the history of the U.S. Over the next five to 10 years, $68 trillion will be transferred between generations as Baby Boomers pass on, according to Cerulli Associates. With that transfer comes an opportunity for wealth through planned giving, estate planning or insurance vehicles to be donated to charity. Therefore, nonprofits are now competing with one another for these dollars, and the “winners” will be the ones who gain first move advantage.

Planned gifts are critical for successful campaigns. Planned gifts provide an easy vehicle for donors to make transformational commitments that will not impact them in their lifetime. Moreover, they allow donors to invest at a higher level, beyond disposable income. That said, when embarking on a capital campaign, for example, nonprofit organizations should be proactively pursuing planned giving to raise more money and advance their missions.

Blended gift options (outright versus future gifts) and gift-planning mechanisms maximize a donor’s philanthropic impact. Proactively integrate gift planning into your campaign strategy to facilitate gifts that focus on a donor’s philanthropic impact and the donor’s total wealth. Once you have an approach in place, make requests for transformational blended gifts using tools, such as descriptive gift-planning definitions, talking points directed at learning more about a donor’s philanthropic impact and total assets, and proposal language directed at securing transformational, blended gifts.

Incorporating planned giving into a capital campaign can increase a campaign’s success to an exponential degree. Now is the time for nonprofits to begin taking advantage of this historic wealth transfer by marketing legacy giving options to donors of all wealth capacities to raise more money and elevate the impact of their mission.

We have seen firsthand how these macroeconomic factors can significantly impact organizations and elevate campaign goals. With experience managing multiple comprehensive campaigns across the country, we’ve seen campaign goals jump 25% and have been witness to organizations raising revenue at levels never before seen because donors now have cash, as well as the ability to commit to deferred gifts through their wills, insurance or other planned giving mechanisms.

We are amid the single greatest moment in philanthropic history. With the right tools and resources in place, nonprofit organizations can make the most of this moment in history to maximize revenue and support their philanthropic missions.