Last week, everyone, including our team, focused on the big-ticket item for nonprofits – the CARES Act and its grants/loans. It is vitally important that your nonprofit organization considers applying for this money in order to leverage it as working capital in the coming months ahead. However, the next big-ticket item was the first-of-its-kind “above the line” $300 charitable deduction for those who do not itemize donations. This is another way to stimulate unrestricted donations in the charitable sector. My good friend, Tawnia Wise of Wise Resource Development, does a marvelous job of walking you through this opportunity as well as offering her top tips for crafting a fundraising appeal to capture the attention of your donors.
The federal government is encouraging charitable giving through the Coronavirus Aid, Relief and Economic Security (CARES) Act, and it’s time to be proactive about getting your share of those donations.
After the 2017 tax reform law that nearly doubled the standard deduction, the number of Americans claiming the itemized deduction for charitable gifts dropped sharply. The law had triggered a decline in charitable donations by individuals. But with the COVID-19 crisis upon us, the country needs nonprofits to help us climb our way back to normal. The CARES Act aims to stimulate giving so that nonprofits can provide the support our communities need.
Individual taxpayers who claim the standard deduction: The CARES Act allows an “above the line” tax deduction for taxpayers who do not already itemize deductions. For tax year 2020, the charitable deduction is up to $300.
Individual taxpayers who itemize their deductions: The CARES Act effectively suspends the limit on percentage of adjusted gross income for deductions of qualified cash contributions for the tax year 2020.
Corporate donors: The limit on charitable deductions for corporations has been increased from 10% to 25% of (modified) taxable income.
No connection between the contributions and COVID-19 activities is required for donations from individuals or corporations. For more information about how the CARES Act impacts nonprofits, refer to this chart from the Council of Nonprofits.
So, how do you leverage this giving opportunity for your mission? Craft a fundraising appeal based on the following tips.
1. EXPLAIN YOUR RELEVANCE
How you position your agency during this critical time will dramatically impact how people see you for years to come. Now more than ever, it is time for you to clearly describe the value of your mission work. Make sure that your donors understand your results and your impact on the community. Craft your donor appeal with a focus on concrete outcomes that tell your story.
QUESTION TO CONSIDER: What can you do today so that donors will remember your organization’s efforts in a few years when they think back to the pandemic?
2. EXPLAIN THE VALUE OF A GIFT
Give donors concrete examples of how their gift can make a difference for your organization. Since a $300 gift is the sweet spot for taxpayers who claim the standard deduction, let donors know what $300 can do to support your mission. Determine this by dividing your expenses for a program by a unit of measurement (time, people served, services provided). When sharing this information, be careful not to use restrictive language like, “Your donation will provide food for a family of four for a month.” Instead say, “A donation of $300 could provide food to a family of four for a month.” The difference of one word determines whether you have promised the use of the gift to a specific purpose.
QUESTION TO CONSIDER: For donors who are looking to make the greatest impact, how does your value proposition compare with those of your peer organizations?
3. EXPLAIN YOUR RESPONSE TO COVID-19
If you are providing direct services to people impacted by COVID-19, share what you are doing. Explain how these efforts may be stretching your resources or describe the growth in demand for services that you are experiencing. If you are not providing direct services, but COVID-19 has impacted your ability to serve your clients, share how you are pivoting to continue to serve them to the best of your abilities.
QUESTION TO CONSIDER: What is the most positive change that you have been able to make in response to the pandemic?
4. BE POSITIVE WITH URGENCY, NOT NEGATIVE WITH PANIC
Keep in mind that your donors may already be in a state of crisis. Fundraising with a sense of urgency can quickly cause donor fatigue, especially when almost every other nonprofit is doing the same thing. There can be a fine line between a sense of urgency and “We will crash and burn without your support.” People don’t want to support a sinking ship. They want to support a winner. Give donors something to be hopeful about by being honest about your situation and how they can help. Give them a way to make a positive impact.
QUESTION TO CONSIDER: What message or service could you give to your donors to ease their worries? Do you have any insights or knowledge that might be valuable to them?
5. BE CAREFUL ABOUT THE LANGUAGE YOU USE
Think through every single word and phrase you’re using in your appeal and ask yourself, “Am I saying this with hope in mind? Is there a way I can say this with greater positivity?” People NEED hope right now, and this is your chance to give it to them. In the title or opening of your appeal, don’t use COVID-19 or coronavirus. Think of a hopeful opening or a phrase that will catch their eye as they are deleting the massive amount of COVID-19 notices they’re already receiving. Coronavirus has shaken our world and reminding donors that these times are unprecedented or using language like, “in times like these,” is just a painful reminder of that fact. Use language that reflects the hope and impact provided by your mission work. The reminders of the scariness of the situation are everywhere. There is no need to herald them in your appeal.
QUESTIONS TO CONSIDER: Which emails and letters are you most likely to open? What can you learn from your own behavior to better understand how to speak to your donors?
6. ENGAGE YOUR DONORS
Encourage feedback and questions from your donors. Consider hosting a virtual townhall meeting to share updates. Ask for suggestions on how you can best communicate with and support them during this time. If you are pivoting events or strategies, engage them in brainstorming and implementing those activities. Those donors who are most committed to your mission will appreciate this opportunity to be part of the solution.
QUESTION TO CONSIDER: Is there an activity that you could invite your donors to do with their children to help them better understand your mission (and give them something to do with cooped-up kiddos)?
7. LEVERAGE #GIVINGTUESDAYNOW ON MAY 5
Giving Tuesday organizers are launching a national giving day on May 5 to raise critical funds for COVID-19 relief and recovery. For nonprofits in North Texas, we are excited that Communities Foundation of Texas, United Way of Metropolitan Dallas and the Dallas Cowboys are spearheading North Texas #GivingTuesdayNow. This is the perfect opportunity to use these tips to launch your fundraising appeal.
QUESTIONS TO CONSIDER: How can you engage every member of your team in this effort? What would it take for 100% of your staff and board to promote your efforts on social media and by email, text message, etc.?
We hope these tips will help you capitalize on the tax benefits for individuals and corporations created by the CARES Act so you can continue serving clients in need. If you have questions or suggestions for successful fundraising appeals, please share them with us.