Happy December!
It’s the last month of 2022, and we can’t believe how fast the year has gone by.
At the community foundation, we are dedicated to growing philanthropy in our region by engaging a broad and diverse donor base. We provide tools and services to help donors establish charitable giving plans and structures to maximize their ability to support the organizations they care about–you–now and for years to come.
A crucial component of our work is helping you and other nonprofit organizations grow your endowment funds and reserve funds by providing back office services to handle the administrative side of these funds so you can focus on your mission, fundraising, and engaging donors. For example:
–The team at the community foundation is adept at navigating the specific accounting standards that are unique to endowments, reserve funds, and donor-designated funds.
–The community foundation team can help you establish investment policies and gift acceptance policies, making it easier for you to engage donors in productive fundraising discussions.
–The community foundation is committed to offering investment options that empower your organization to exercise outstanding stewardship of the funds donors have entrusted to your board and staff to support your organization’s mission.
–The community foundation’s staff is familiar with a wide range of planned giving structures and techniques and can serve as a sounding board for your fundraising efforts.
We look forward to working with you as 2022 draws to a close and as you pursue your mission in the months and years ahead.
Thank you for your partnership.
–Your community foundation
Converting 2022’s daunting fundraising realities into success in 2023 and beyond
You’re not alone if it’s feeling harder to raise money as the year winds down. Late November's stock market rally may help, but it's still been a tough year.
Indeed, the team at the community foundation is here to help you maximize your efforts to grow your endowment and reserve funds, even in a roller coaster market, and also help you facilitate complex gifts where the community foundation can serve as your partner to receive transfers of alternative assets such as real estate and closely-held stock. We can even help you work with a donor who wants to give an alternative asset to benefit your organization along with other organizations. We strive to ensure that no philanthropy is left on the table as you work with donors who are passionate about supporting your mission!
Here’s the reality we’re all dealing with in the philanthropic sector. Though 12-month results for the period ending September 30 have been encouraging for many, more recent year-over-year results for 2022's third quarter were universally down according to the Blackbaud Institute Index. It reported that organizations raising annual revenues in three ranges—up to $1 million, $1 – 10 million, and $10 million or more—experienced declines of 3.5% to nearly 5% from July to September.
The reasons for the declines are all too familiar:
Inflation and fears that it will continue are cutting into donors’ ability to give. Though the inflation rate is widely reported as nearly 8%, it’s likely higher for many willing to calculate a personal inflation rate based on their household’s consumption. There’s just no getting around the high cost of food, shelter, energy and transportation.
Covid repercussions and threats of new strains have hampered attendance and participation at in-person events that enjoyed robust turnouts through 2019. While in-person events are making a comeback, attendance is still not back to pre-pandemic levels.
Broad stock market declines of 20% or more have reduced the number of appreciated stocks that have traditionally been a gifting source for those donors who’ve benefited from the gains, and people are still feeling the sting even with the recent stock market rally.
Fears of recession have grown from “maybe” to “likely” in the minds of many economic analysts as the year has progressed.
Job insecurity, amplified by weekly news of layoffs, may be rattling donor confidence, particularly in the tech sector.
All that said—nonprofits, the people who run them and those who support them—are, by definition, an optimistic bunch. In good times or bad, we believe that better days are ahead, filled with hope and promises of progress.
And there are reasons to be hopeful!
Year-over-year fundraising results for the 12 months ended September 30, 2022 were encouraging despite concerns about third quarter results. Blackbaud reported increases of 6.4% - 7.7% for all organizational size categories. For medium and large-sized nonprofits, online fundraising grew by more than 5%. Reaching more donors via digital channels offers broad opportunities for new and sustained conversions.
Another bright spot is that unemployment is low and steady, mirroring 2019 levels; 4.0% was recorded in January and subsequent months leveled off near 3.5% according to the U.S. Bureau of Labor Statistics. Despite inflation, earners largely have a heart for others and a willingness to help.
As your fundraising efforts advance into year end and beyond, it's wise to know where your money comes from and diversify your fundraising. Apply the same logic to your fundraising as you do to your retirement savings account and avoid reliance on any one tactic in particular.
To that end, now is also the time to take a closer look at your endowment and reserve funds and continue to raise the subject of bequests, planned gifts, and endowment gifts with your donors.
If you've already established a legacy society, evaluate what you can do to deepen legacy donor engagement. Review your list of legacy donors and dates of last contact and look for patterns. If it's been more than a year since you talked with a legacy donor, make a plan for personal outreach in the first quarter of 2023. While it's true that most charitable giving occurs during the fourth quarter, the beginning of the year can be an excellent time to talk with donors about planned gifts and bequests. Many donors set goals at the beginning of each year to update estate plans, so that's a perfect time for your organization to be top of mind. If your organization has not yet established a legacy society, now may be the time to do it.
Remember, when you are working with legacy donors and their advisors. make sure that any legal documents related to a planned gift not only properly name your organization using its exact legal name and, ideally, location, but also include protective language such as "and its successors" in case your organization ever merges with another entity. Reach out to the community foundation for assistance with complex cases; frequently a designated fund at the community foundation can meet both your organization's goals and your donor's goals while ensuring that the donor's intentions are not thwarted by future, unforeseen legal issues.
The net-net? If you’re experiencing the frustrations of fundraising, a good remedy may be to find the hope that you want donors to see in your own organization, especially as you communicate to donors that your organization is here for the long term and they can be an integral part of ensuring its future by supporting your endowment.
Year-end reminders for your donors
Encourage donors to review their stock holdings
Even though 2022’s rough stock market may still be a concern, late-year rallies may help. Chances are not all of your donors’ holdings have had an unusually down year. Gifts of appreciated stock is still one of the most tax-savvy ways for donors to support your organization because capital gains tax can be avoided on the appreciated stock.
Donors over 70 ½ should consider a Qualified Charitable Distribution
A Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If a donor is over the age of 70 ½, the donor can direct up to $100,000 from an IRA to a public charity like your organization. If a donor is over the age of 72, a QCD can count toward the donor’s Required Minimum Distribution (RMD) for the year. That means the donor will avoid income tax on the distributed funds. Ask your donors to consult their tax advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit.
Remind your donors to watch the calendar
Be sure to remind your donors that certain steps must be taken to complete gift transactions during this tax year, including making sure that checks to your organization are postmarked or hand-delivered to your office no later than December 31. Gifts of marketable securities also need to be fully transferred by December 31, so make sure your donors contact you in plenty of time for you to process and receive the transfer.