Changes to the federal tax laws concerning charitable donations don’t seem to be having a big effect on contributions nationwide or in the Pikes Peak region. But that doesn’t mean some nonprofits aren’t feeling it.
According to a report by the Association of Fundraising Professionals released Feb. 4, eight in 10 U.S. charities raised the same amount or more in 2018 than they did in 2017.
The report, based on a survey of 384 nonprofits that are members of the organization, also stated that 78 percent of the respondents raised the same amount or more money in the fourth quarter of 2018 compared with the same period a year earlier.
The survey asked respondents whether their fundraising has been impacted by the tax changes signed into law in December 2017. Those changes doubled the standard deduction, which was seen as a disincentive to itemize deductions and thus to claim charitable deductions.
A majority of respondents (73 percent) reported that very few, if any, of their donors expressed confusion or uncertainty about the tax changes.
“An even higher percentage [81 percent] indicated that very few or no donors expressed plans to delay giving until 2019 or use techniques like ‘bundling’ to take advantage of the itemized charitable deduction. ‘Bundling’ refers to donors giving every other year or every three years to accumulate sufficient gift levels to give to a charity and take advantage of the itemized charitable deduction,” the report stated.
According to the report, which appears on the organization’s website, afpglobal.org, respondents said issues specific to their organizations, such as staffing levels or new fundraising campaigns, had more influence on their fundraising than the economy, tax changes, government shutdowns or other external factors.
While external factors do have an effect, “it’s what we decide to do, or don’t do, that has the greatest impact on reaching our fundraising goals,” Association of Fundraising Professionals president and CEO Mike Geiger stated in the report. “So, it’s important that fundraisers be confident, stay updated on trends and issues, keep up their professional education, networking and training, and use their skills and experience to plan out a successful year.”
The report did note some changes in patterns of giving. Some respondents stated they had fewer donors in 2018 than in 2017, but that those who gave typically gave more. Others said they saw less activity in the fourth quarter of the year and particularly in December as compared with previous years. One respondent attributed that to the combined effects of the tax law changes and end-of-the-year stock market and economic news.
Charity at home?
For the most part, local nonprofits appear to be following the national trends expressed in the survey.
“There has not been an overall large impact on giving to The Navigators,” said Jim Young, senior vice president of development and communications. “Our sense is that [the tax changes] have certainly been disruptive to people’s giving patterns, but it’s not necessarily the same for all donors.
“Some donors are managing things more aggressively using tools like Donor Advised Funds — a tool that allows a donor to make contributions into a fund, receive the tax benefits immediately and then distribute that giving over months or years.”
Young said for organizations in the faith sector like The Navigators, tax implications play less of a role in individuals’ giving decisions than in other nonprofit sectors. The tax landscape “is only one of many factors that affect fundraising success year to year; perceived need, the quality of care and service the organization provides and the effectiveness of communication with donors generally are more impactful.”
At Discover Goodwill, overall donations increased in 2018, and the organization is setting goals for growth in 2019.
“I can confidently attribute a lot of that to our core donors, who would give to the cause no matter what,” said Bradd Hafer, Discover Goodwill’s director of marketing and communications. “They are really mission-focused. That’s the most important factor for us.”
Hafer said another dynamic is the event-related component of Discover Goodwill’s fundraising. An Enchanted Weekend, the organization’s signature fundraiser, provided multiple opportunities for donors to contribute — and enjoy themselves as well.
The weekend, held at Garden of the Gods Collection in August, included a golf tournament, a food and wine tasting event, clothing boutique and the traditional gala. Hafer calls Discover Goodwill’s annual dinner, set this year for April 17, a “friendraising event to build awareness and celebrate some of the individuals that have excelled through our services. That kind of sets the stage for others, whether it’s volunteering, contributing, shopping or donating in kind. We welcome all ways to become invested in Goodwill.
“You never know what will happen, but our goals are set on increasing our gross revenues and fundraising development efforts in 2019,” he said. “A lot of that has to do with the investment level of our current and prospective donors.”
Pikes Peak Community Foundation accepted nearly $6 million in new funds and granted $4 million to nonprofits in 2018, “so we have not seen a direct effect from the increase in the standard deduction,” CEO Gary Butterworth stated in an email. “I have not heard from organizations expressing the fact that giving is down; in fact the continued generosity of our community shows, as I believe community campaigns like Give! and the Empty Stocking Campaign have hit their targets year over year.”
What about 2019?
Renny Fagan, president and CEO of the Colorado Nonprofit Association, said it’s too soon to tell what the full impact of the tax changes will be.
“As always, nonprofits are operating in a dynamic, changing environment,” Fagan said. “The change in the law greatly reducing taxpayers’ incentive to itemize is one of those changes. It probably will take a year for the changes to be felt and for statistics to accurately be determined.”
The association’s annual year-end snapshot survey of about 130 Colorado organizations did offer some insights.
“About 25 percent [of the respondents] said they fell short of their overall revenue goals,” Fagan said. “We asked, ‘Did your organization feel any impacts of tax reform?’ Seventy-five percent said no, and 25 percent said yes.”
About 40 percent of the respondents said they fell short of their corporate giving goals; 40 percent met those goals, and 20 percent did not have a corporate giving goal.
“Overall, I think corporations are generous in how they support nonprofits,” Fagan said. “They don’t always do so through cash donations; often they contribute time and talent, which is very important to nonprofits.”
The survey was taken in early December, however, before many individuals made their decisions on taxes.
“I think next year could be a year to watch,” Fagan said.