Growing donor engagement as spring gets into full swing
It’s been a tough year for nonprofits! Increased demand for services, paired with economic uncertainty, created budget challenges for many charitable organizations as donor support became unpredictable precisely when program expenses were reaching peak levels during the pandemic.
But things are looking up. The team at the community foundation is keeping an eye on key statistics and trends as we counsel the many charitable organizations in our region who count on support from the foundation’s donors to keep their missions going strong. Contact us anytime to learn how the community foundation can offer infrastructure and support for your endowments, donor-directed legacy funds, and gifts of alternative assets such as real estate and closely-held business interests.
In this month’s newsletter, we’re providing marketplace context for you and other community organizations who'd love to reboot fundraising efforts as the pandemic eases.
People and businesses are stepping up
Hopeful news is emerging from Indiana University’s Lilly School of Philanthropy, where scholars are predicting an uptick in giving for this year and next year, especially by individuals. Notably:
Americans’ household giving could rise by as much as 6% in 2021 and by almost 4% in 2022.
Bequests and other estate gifts are expected to increase by just over 1% in 2021 but by a whopping 11.9% in 2022 due to anticipated large bequests.
Corporations will likely increase giving, as well, by over 4% in 2021 and by over 6% in 2022.
Grants from foundations may decline by a percentage point in 2021 before bouncing back to an increase of nearly 9% in 2022.
If you’re not taking the opportunity in 2021 to double down on your efforts to engage your individual donors and your corporate partners, you may be missing an opportunity, especially given that foundations’ grantmaking may temporarily level out.
“Universal charitable deduction” bears fruit
Four Republican Senators, four Republican Democrats, a House Democrat, and a House Republican have introduced legislation to expand the increased charitable deduction cap for non-itemizers to up to one-third of the standard deduction. The Universal Giving Pandemic Response and Recovery Act (S.618/H.R.1704) also extends this temporary $300 deduction, which was included in the original CARES Act, through 2022 and enhances the provision to include gifts to donor-advised funds.
Preliminary reports suggest that the so-called “universal charitable deduction” is already showing signs of success in encouraging more people to give to charitable organizations. For example, AFP’s Fundraising Effectiveness Project reports a 28% increase of $300 gifts on December 31, 2020. Considering that $300 is the precise amount of the maximum a non-itemizer can deduct, this does not seem to be a coincidence! AFP also reports that gifts of $250 or less increased by more than 15% in 2020 compared with 2019.
The inclusion of donor-advised funds as qualified recipients appears to acknowledge that donor-advised funds can be powerful tools to increase effective charitable giving. The team at the community foundation frequently assists families, individuals, and businesses with structuring a charitable giving plan using a donor-advised fund to unlock otherwise unavailable resources and turn them into assets that can more easily be deployed to support the charities the donor loves.
Timelines for giving may shift
For donors who typically activate their annual charitable giving plans immediately after tax season, 2021 will likely result in delay, thereby potentially impacting the timing of gift flow into your organization. This is because the Internal Revenue Service and the Treasury Department have extended the federal income tax filing and payment deadline for the 2020 tax year from April 15, 2021 to May 17, 2021. (Individuals still must comply with state filing deadlines, to which an extension may or may not apply.) Note, however, that the extension does not apply to nonprofits and business entities, so it’s business as usual on April 15 for you and your organization’s Form 990!
This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.