Hyperventilating Over Tax Reform

We’ve had a number of leaders and managers talk to us about the new tax law’s effects on revenue. And the conversations have ranged from calm logical processing of all of the issues to mild panic.

Some “experts” are saying that non-profits can expect a 15% drop in revenue in 2018. Others are saying it will only be 5-7% or less.

It is good to anticipate and plan for tighter times.

But our advice is not to focus on the tax law’s effect at all but, instead, to focus on how you can help each of your caseload donors understand how their giving is making a tremendous difference on the planet.

It is true that there will be a minority of donors who, no matter what you tell them about the good effect of their giving, will still focus on how to manage the numbers so that their tax return will deliver economic value to them. True.

But with a few exceptions, even those die-hard money-focused people can be turned by a story about how a life can be changed, how a child can be rescued, how a lake can be saved, or how a wrong can be made right.

Think about this.

A common trait of all human beings is that, to varying degrees, we all care about something or someone outside of ourselves. With some folks you would never know it because it is buried in their psyche, often hidden by the scars and troubles of a hard life, or by hurts and anger that have covered up their compassionate heart.

But if you have properly identified a donor’s passions and interests – those things that reach into the depth of their heart and soul – Jeff and I are sure that you can get their attention. If that donor is predisposed to valuing the tax effect of their giving more than the good that can be done, THIS is how to move their focus on money to a focus on doing good.

But the key is how you manage all of that.

If you start with worry about how the donor will give less because they cannot enjoy the tax relief they did in the past, you will bring all that negative energy into your conversation and messaging. And you will harvest the very thing you planted.

If, instead, you focus on the outrageous joy you can give the donor by helping her fulfill her deepest passions and interests, believe me, she will cast aside her preoccupation with the tax effect and just get the good done right now!

So our advice is to go ahead and do your planning on cost/expense control in anticipation of revenue decline. But be careful not to go nuts on this and create a lot of fear in your own heart about how this will affect your caseload, your major gift program or your organization.

Then direct your energy to doing these three things that will pay off far more than a cost-control and fear orientation:

  1. Clean up your act on program impact. Too many non-profits have not done the hard work of figuring out how to measure program impact. The result is that they cannot provide proof of performance to their donors – to show them how their giving is actually making a difference. And when you can’t do this very basic thing, you have already lost a donor.
  2. Keep finding and sharing stories with donors. Look for stories that talk about the problem your organization is addressing, and stories that show how a donor’s gift has made a difference. A story is the best way to get into a donor’s heart and mind: showing them how important and valued their giving is.
  3. Keep telling your donors that their giving is making a difference. You can’t do this enough. And if you do it right, all the “tax stuff” (for most people) will go away.

Focus on the good that a donor can and will do, and you’ll accomplish far more good for the revenue of your caseload and your organization than any worry or fear. Believe me.

Richard

PS — Sometimes we really do need to focus on the bottom line, and that’s why we created our Major Gift Academy course “The Economics of Major Gift Fundraising.” I hope you’ll join us.

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2 Comments

  • Cheri Friedman says:

    I haven’t been worried regarding the new tax law on donations. Our donors look at the value our organization is to the community and make donations on that, not on a tax write-off. We make sure that they know what their money is doing not only for us but for those we serve. We make sure that they have our stories of the good that is coming from their support. The only time we even mention it for taxes is when we sent confirmation of their donation and that it IS tax-deductible. And even that is followed up with a hand written thank you note that once again acknowledges what their support is doing. I truthfully don’t know a single donor to my organization that does it for a tax-deduction.

  • SUSAN PERCIVAL SPEERS says:

    Just a quick THANKS for getting my mind back to the big picture of PROGRAM IMPACT. You jump-started a list that I now have going of metrics we can research and turn into stories for a 30th anniversary campaign!

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