My Columns Fundraising partners have some strong opinions on the effects of the new tax law that will impact all Georgians. Despite the noise from the media, and more from a few charities, we believe the new law will positively impact charitable giving. Here’s why:
Eighty percent of the taxpaying population will realize a tax break. In fundraising there is a simple correlation: When people have more money in their pockets, they tend to give away more money. Inversely, when you are taxed at higher rates: “You can’t give what you don’t have.”
Major donors ($25,000+) will continue to itemize their tax returns. And 80% – 90% of campaign contributions come from major donors and lead gift donors.
Looking at all charitable giving in the latest national study by the Association of Fundraising Professionals:
· 76% of gifts come from 4% of donors. Yes, you read that correctly – three quarters of all giving comes from only the top 4% of donors.
· 89% of all giving comes from the top 14% of donors (usually those who give $1,000 or more), and
· 96% of all giving comes from the 33% of donors who gave $250 or more.
The stock market (particularly the wealth effect of a rising market) may influence giving levels, but study after study shows no correlation between major gifts and tax deductions.
Major donors also have extra incentive to pre-pay existing pledges, since the new law allows the donor to deduct cash gifts up to 60% of their Adjusted Gross Income (AGI) in the year of the gift. The old law only allowed up to 50% of AGI.
Charitable giving is not driven by tax law; it’s driven by a donor’s passion for an organization. When a charity’s mission aligns with a donor’s passion, it’s the joy of giving that most often wins the day.