NO ONE ENVIES YOU, DEAR READER. Higher ed administrators are seeing students with greater financial need and donors with shallower pockets and shorter arms. What are you and your fundraising folks to do in order to narrow that gap?
Start by diverting your attention away from where it’s not needed. Don’t sweat President Obama’s charitable deductions proposal. Media attention on the proposal to lower the value of tax deductions for charitable donations by wealthy individuals has focused on high net-worth giving. But the fact is, most charitable giving in the United States comes from nonwealthy donors. Will Obama’s proposal change that fact? Of course not.
It would limit charitable deductions to 28 percent for taxpayers at the highest marginal income tax rate, currently 35 percent, whose annual income exceeds $250,000. For example, a $1,000 gift from these donors would earn a $280 charitable deduction rather than a $350 deduction. This isn’t great for fundraisers, but it won’t have the devastating effect on charitable giving that critics predict. Consider these points:
• Proposals may not become laws.
• If the proposal does become law, it won’t take effect until 2011. There would be time to educate donors and retune fundraising messages. And high-income donors would have two years to continue making gifts that are deductible up to their highest marginal income tax rate. I see here an opportunity to encourage donors to accelerate pledge payments to earn maximum deductions.
• High-income donors contribute a small percentage of all charitable gifts, and tax advantages aren’t why they give.
Nearly two-thirds of all charitable gifts made in 2004 came from donors whose income was under $200,000, according to Giving USA 2007. (This is the most recent year for which I can find this statistic, but giving patterns don’t shift much over five years.)
Americans give to nonprofits because they value the
missions they're supporting.
As development professionals have long recognized, enormous gifts from the wealthiest donors make headlines, while gifts from those at middle and low incomes comprise most of the giving to our nation’s nonprofits. As for the motivations for giving, in the 2007 U.S. Trust Survey of Affluent Americans study, only 33 percent of respondents cited tax advantages as their first thought when deciding whether to donate.
Americans give to nonprofits because they value the missions they’re supporting; they believe in a scholarship program, a groundbreaking line of research, or a promising modern dance department; they want to set an example for others, including their children; they want to repay the college and society they regard as having enabled their success; and they want to help those who have less. Taxes? They certainly figure in, but they’re not top of mind.
Conversation Openers
Where should you divert your attention?
The planned giving area has a few tempting offerings for those who are talking to prospects and donors. For the higher ed clients of our firm, that means all the C-level leaders, rather than just development staff, will join us for 90 minutes of training on how to open planned gift conversations. We cannot make them experts, nor should they be. Their expertise is in their profession. (Besides, if they became experts they wouldn’t need us.) We can get them comfortable opening the door and inviting the experts to join in the next step.
I hope your gift planning experts are offering to train you and your colleagues. And I hope you accept their overtures. You will help cultivate a valuable culture of fundraising at your school when the largest possible number of administrators is encouraging giving.
Recession Busters
Now that you’re paying attention to planned giving, here are gifts that can help your college—and your donors—through our recession.
If you have bullish prospects who are charitably inclined, look to the charitable remainder unitrust for a term of years. This is a staple of planned giving programs. Your school may already be named in some. It pays income to one or two “income beneficiaries,” and that income is a fixed percentage of the trust value. At the end of the term, the remainder is a gift to your school.
