Friday, June 1, 2018

One More Time: Congress, the IRS, and Nonprofits

Heads up: Congress is considering two measures that will affect IRS regulation of nonprofits.

First, a little background – for the past ten years, Republicans lawmakers have vented their anger at the IRS’ supposed bias against right-leaning nonprofits by slashing its budget big-time (current budget is 18% less than it was in 2010, adjusted for inflation) – despite the inconvenient fact that numerous left-leaning groups were also targeted for similar scrutiny. 

Now, suddenly things have changed, following the passage of the new tax (their signature and pretty much only legislative accomplishment since they have controlled the Presidency, the House, and the Senate). The House Appropriations Committee just released a spending bill for 2019 that would increase the IRS budget, albeit modestly, including new funds to help implement the GOP tax law.

Here’s what else is in the bill: a provision that would pretty much bar the IRS from denying tax-exempt status to churches that participate in political campaigns. Sound familiar? It’s the Johnson Amendment redux (quick review – it’s a long-standing tax law that prevents churches and other nonprofits from endorsing or opposing political candidates). The House Appropriations Committee included a provision trashing the Johnson Amendment in the 2018 spending bill, but it didn’t make the cut. Apparently, if at first they didn’t succeed, they intend to keep trying and trying again. 

On the other side of the aisle, the Senate Appropriations Committee is considering a proposal eliminating donor reporting requirements. As it stands now, federal tax law requires nonprofits that file an annual tax return to provide information on donors giving contributions totaling $5,000 or more (in money or property). Note that the IRS is required by law to keep this information confidential.This issue has long been fought in state courts. In 1958, the NAACP successfully challenged an Alabama law requiring nonprofits to provide a list of members, arguing that disclosure would harm them, their supporters, and their right to free speech - and they won. But more recently, in a case brought by Citizens United in New York, a federal court ruled the other way. According to the judge, "an individual who seeks to advance a cause might reasonably hesitate knowing that an officer of the state will see that they have done so, but totalitarian tendencies do not lurk behind very instance of a state's collection of information about those in their jurisdiction." 

So: Is maintaining donor anonymity essential to protect free speech, especially for those voicing controversial options in hostile environments? And does free speech mean that churches should be able to use tax-deductible dollars to support partisan political candidates? The debate continues in courts, in Congress, and online. 

Here's where I stand: I'm firmly on the side of donor transparency. I believe the public has the right to know the provenance of tax-deductible donations supporting issue-driven nonprofits, whether conservative or liberal. And I'm firmly on the side of separation of church and state. All nonprofits, including churches, can already speak out and advocate on important issues, but active participation in partisan politics crosses the line.

Tuesday, May 1, 2018

Three Simple Fundraising Tips: Bequests, Brokerage Accounts & IRAs

Bequests, brokerage accounts and IRA contributions: all of these are important tools to include in your fundraising kit. Here’s some basic information about each, including how they are affected by the new tax law:

Bequests: Bequests are a simple, easy, and common form of charitable giving (8% of total annual giving, and 90% of planned gifts). All a donor has to do is add a clause in their will or trust, designating a specific amount of money (or stocks, bonds, assets) to be given to your nonprofit. Your nonprofit doesn’t have to have a complicated planned giving strategy, or a designated legal advisor, or a big marketing plan. All you have you to do is actively encourage people to consider a bequest to your nonprofit – on your website, brochures, enewsletters – as well as in personal meetings with supporters. Start building a list of folks who have done so, give the group a catchy moniker, and post the list (with permission) on your walls and website. Ask them to publicly share a personal story about why they chose to do so.  And note that bequests come for all kinds of people (not just the obviously well-to-do) - often as a surprise, from long time donors who have given small gifts over time, and whom you may not have even met.

Brokerage accounts: Many Boomers may not be to make significant cash donations, but as their parents pass on, they are quite likely to inherit appreciated stocks. Under the new tax law, folks who donate appreciated stocks, bonds or other assets to a charity will continue to be able to avoid all capital gains tax - regardless of whether or not the donor is able to itemize. To facilitate these gifts, your nonprofit needs to have a brokerage account (my recommendation: Schwab is the easiest and best option). It takes some doing to set it up, but there's no cost, and once the paperwork is in place you are ready to go. Be sure to make it clear on your donation page that you welcome gifts of stock, and that it's easy to do.

IRA Rollover Contributions: Folks who are 70 1/2 or older and have an IRA can make a charitable donation (of up to $100,000) directly from their IRA accounts. It's easy - and, similar to gifts of stock, can be done whether or not the donor is itemizing. Plus the amount of the distribution will be excluded from their taxable income, yielding a much better bottom line on returns; as well, these donations will count towards the annual required minimum distribution.

None of these tips are instant money-makers: we're just talking basic, long-term strategies, all of of them simple and well worth pursuing. You just need to make a decision to move forward and let folks know about these opportunities to support your good work.

Friday, March 30, 2018

Fundraising in Fractured Times

Chaos on the national level along with uncertainty about the impact of the tax bill and the future of our democracy have made these anxious times for nonprofits. Sometimes it feels like you can’t get a break from crazy tweets and jaw-dropping headlines and national tragedies.

And yet, you still need to raise money for your work. So here are five fundamental principles to keep in mind.

1) Fundraising is a year-round project. It’s not just about one big fundraising campaign, or one gala event; you need to be asking folks many times, in many ways, to contribute to your organization. This includes making several appeals throughout the year via email, website, snail mail, Facebook, and personal contacts. It includes having a website that is easily navigable, well designed, and drives visitors to your donor page.

2) Every staff member is a piece of the fundraising puzzle. Although there may be one key staff member who has the main responsibility for fundraising, everyone should be knowledgeable about your strategies, able to make a quick elevator speech about your mission and the value of your work, focused on making positive connections with clients and donors, and ready to hand out remit envelopes. Most important: every Executive Director needs to fundraise, in particular through individual contacts with significant donors. This should be written into their job descriptions, and a focus in every performance review.

3) Everyone on your Board bears responsibility for fundraising. Yes, I know that most Board members resist direct asks, and would rather spend hours planning a fundraiser than one hour meeting with a donor. So you have to make it clear in your Board job description and orientation that fundraising is a key responsibility and what your expectations are. You have to provide training (not once, but regularly).

4) Fundraising is driven by organizational data. You can’t fundraise effectively and strategically without a well-constructed and comprehensive database. If you have one that’s not working for you, find a better one. You should have comprehensive information at your fingertips about each donor – when they have given, why, how much, how they like to be contacted. And you should be able to segment lists for focused appeals.

5) Fundraising is about personal connection. But the bottom line is that all the data in the world does not replace the value of authentic human connection. This starts with what happens when folks walk into your facility or office, with how they are treated on the phone, with how quickly and well you respond to their emails. And it continues into personal notes on letters, prompt thank yous, donor appreciation events, personal phone calls, house meetings, and one-on-one meetings in which you listen, engage, ask for feedback, and solicit donations.

I know there’s been a lot of chatter out there about increased competition for funds, because there are so many embattled good causes. But I’ve heard that chatter over and over throughout the years, through recessions and political crises and hurricanes and earthquakes. And yet, the nonprofit sector has survived and persisted and raised money. You will too - you just need keep on fundraising.