Keep Them Giving
Raising money from new donors is important. But turning those donors into repeat donors is also critical to the long-term success of an organization’s fundraising efforts.
Typically, an organization spends more money to attract a new donor than to encourage an existing donor to give again. As a result, the positive financial impact of improving donor retention rates can be significant over time.
Strategies To Consider
Organizations that strive to build ongoing relationships with their donors are more likely to be rewarded with continued support. The suggestions that follow may prove helpful.
- Say thank you. Acknowledging each gift the organization receives with a personalized communication — and doing so promptly — gets the donor relationship off to a good start. In addition to sending written acknowledgments, organizations might consider phoning at least some of their donors to thank them for their contributions.
- Engage and inform. Opportunities to interact with donors and let them know about the organization’s work and upcoming events have proliferated. Whether it’s through social media, e-mail, traditional mailings, or a combination, organizations should have a plan to keep their name in front of donors and enhance engagement — without being viewed as intrusive.
- Watch timing. Along the same line, organizations should be cautious not to solicit contributions from past donors too often. Instead of motivating donors to give more, asking for money too frequently could have the opposite effect and only serve to alienate them.
- Encourage regular giving. Having a monthly giving program in place that interested donors can sign up for voluntarily helps avoid this problem. To help get the word out, an organization should highlight its giving program at every opportunity.
- Connect with younger adults. They may not be able to make big cash contributions now, but the Millennials are a large generation with significant potential as a future funding source. Establishing a connection with them now can be a smart long-term strategy.
Organizations that view fundraising in a positive light — as an opportunity to promote and support their mission — are likely to have more success than those that see fundraising as a drain on their time and resources. When mission and values come first, donor relationship building becomes a shared responsibility, involving everyone from executives and board members to staff and volunteers.
Organizations should identify a clear message they want to convey to donors about their mission and values. Taking steps to ensure that everyone involved in donor communications understands and is on board with that message can avoid any confusion in the minds of donors that might make them hesitant to commit more money to the organization.
Charitable Tax Incentive Restored
The Protecting Americans from Tax Hikes (PATH) Act of 2015, signed into law late last year, restored and made permanent several federal income-tax provisions designed to encourage charitable giving.
Contributions from IRAs
Charitably minded individuals age 70½ and older continue to have the ability to have up to $100,000 a year directly transferred from their individual retirement accounts (IRAs) to qualifying charitable organizations. Qualified charitable distributions are excluded from taxable income.
A qualified charitable distribution offers the donor the potential for greater tax savings than a taxable IRA withdrawal followed by a cash contribution, for several reasons. First, the donor’s adjusted gross income is not increased by the amount of the distribution, which could be helpful in qualifying the donor for various other tax breaks. Second, in the latter scenario, the donor might not receive a first-year deduction equal to the full contribution due to the tax law’s percentage-of-income limits on charitable deductions. And third, even though IRA charitable distributions are nontaxable, they count toward satisfying the IRA owner’s minimum distribution requirement for the year.
Qualified Conservation Contributions
The PATH Act makes permanent the more generous income-based ceilings applicable to individual donors’ tax deductions for charitable contributions of qualified real property interests exclusively for conservation purposes. Instead of the deduction ceiling that normally applies — generally, 30% of the taxpayer’s “contribution base” — deductions for qualified conservation contributions are subject to a 50% ceiling (100% if made by a qualifying farmer or rancher). Amounts that are not deductible because of the applicable percentage limitation may be carried over for up to 15 years.
The law also makes permanent the higher deduction limit (100% of adjusted taxable income) and the 15-year deduction carryover period for qualified conservation contributions by corporate farmers and ranchers.
Donations of Food Inventory
Businesses continue to receive an enhanced deduction for charitable contributions of food inventory. The food must be “apparently wholesome” — that is, be intended for human consumption and meet all quality and labeling standards imposed by government laws and regulations, even though the food may not be readily marketable because of age, appearance, freshness, size, surplus, grade, or other conditions. The PATH Act also makes certain other taxpayer-friendly changes with respect to donations of food inventory.
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