Don't be afraid...
I know this will come as a shock…I am not a tax accountant. On the extremely rare occasion, I wish I knew more about taxes. But on most days I’m like, “Thank you, Jesus! Someone other than me understands this stuff!”
When the hullabaloo began at the end of 2017 about the new tax law, you can only imagine how excited I was. Well, OK, that’s a lie. But when it became clear that this new tax code might have an impact on churches and non-profits, I knew I needed to get my head in the game. While I did not make it through the 1,000 pages of the legislation, fortunately others did (thank you, Jesus, again). I defer to their understanding. As with all things tax-related, there are a range of opinions.
The scariest viewpoint: The increase of the standard deduction nearly doubled, from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples. This may lead many to have less incentive to give. “In fact, [according to accounting, tax & auditing serivces BDO] the current proposals could lead to a decrease of between $4.9 and $13.1 billion in charitable giving, according to a study by the Indiana University Lilly Family School of Philanthropy.”
On the other hand, if you have really rich donors (and some of you do), the new tax law may actually increase donations. How? Read, “How the 2018 Tax law Increases Charitable Giving Deductions.”
Fortunately, giving is not determined solely by the tax law: Mobile Cause recently came out with an excellent Infographic “5 Tax Law Myths Every Nonprofit Should Know.” To get the Infographic, you’ll need to enter in some information about yourself, but it’s worth it. Download the Infographic here. The #1 Myth? “The tax deduction is more important than the relationship with your donors.” Fact: What’s most important to donors is the relationship they have with you.
The good news:
Because (and if) you have been
a. telling your church’s or organization’s story,
b. thanking your donors, and - for those in the church –
c. preaching about why giving is a good and necessary practice to be a disciple…
you are already on track to keep the donors who love and believe in the work you do.
Your community of givers will now need to be primarily motivated not by any tax deductions they can get, but by the lives they will change through their gifts to your church or non-profit.
This is not a time to panic. However, it is time, to step up the storytelling, talk about your mission, believe in your cause, and remind people why their gifts are critical. Tax codes, schmax codes. Let the storytelling and thanking begin.