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How the New Tax Law Impacts Association Fundraising

Erin Reeve | | June 21, 2018

Introduction

In this article, we will explain how the new tax law affects fundraising activities for charitable nonprofits. Before we begin, it is important to note that this article has been prepared for general information purposes. It is not legal advice and is not to be acted on as such.

What is the New Tax Law?

The Tax Cuts & Job Act (or the Tax Reform Bill) is tax legislation that was proposed by the Trump Administration and went into effect on January 1, 2018. In this article, we will take a look at one part of the legislation that will greatly affect fundraising activities: doubling the standard deduction.

How will this Affect Fundraising?

Higher Standard Deductions means itemizing will be far less valuable than it used to be for many taxpayers, which will likely lead to a decrease in the number of taxpayers who itemize (5), (2). Based on an estimate by the Congressional Joint Committee of Taxation, nonprofits should anticipate the number of Americans who itemize to drop from 33% to 5% of taxpayers.

How Should Associations Respond?

Many associations are concerned about how they will make up for the potential loss of donations onset by the new bill. We have compiled a couple of helpful tips to hopefully reduce the hit using ClearVantage Association Management Software.

  1. Create a Contingency Plan. Bring your board and executive directors together to develop a contingency plan around the new bill. Focus on further diversifying your revenue or building it up in different areas ( think - events, partnerships, grants, etc.). Use ClearVantage’s project management module to help you get everything in line and prepare for the future.
  2. Find donors that donate anyway. ClearVantage has powerful business intelligence tools to help you target members more precisely - and find members that will donate regardless of the tax benefit.
  3. Personalize the Donor Experience. Using CV Connect CMS and ClearVantage’s new drag-and-drop HTML email builder, CV Echion, you can create targeted marketing campaigns and a personalized user experience on your website that allow donors to feel more connected to your purpose.
Resources
  1. The Hill
  2. Time
  3. Economic Research Institute (ERI)
  4. National Council for Nonprofits
  5. Nonprofit Law Blog
  6. Morning Star

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