Now that we’re into 2018, it’s vital if you’re a nonprofit leader, fundraiser, or board member to understand what the Tax Cuts and Jobs Act may do to the philanthropic sector. Keep in mind that this is the first major overhaul of tax regulation in more than a generation, so it’s going to have wide-ranging impact. Lawyers and accountants have been working overtime to understand the implications for the new tax law and the IRS is gearing up to get ready for what is going to be an interesting tax season.
If work or lead a charitable organization, you need to be aware of the reality that the new law is expected to affect your fundraising efforts adversely. In other words, you need to speak to your professional advisors, and you should get your team together to prepare an all-hands on deck approach to ensuring the ongoing sustainability of your organization as donor giving patterns will undoubtedly change.
The reality is that 2018 is going to be a significant year for nonprofits and it’s essential that organizations understand how the new tax law will affect them and also charitable giving. If fundraising dollars decrease, which is expected, then most nonprofits, which already survive with slim margins will have a tougher year. Tough decisions will have to be made if donor dollars dry up such as shutting down programs or eliminating staff. Planning will make all the difference.
What’s important at this time is to get your facts and eventually to message appropriately with your supporters. Your donors want to help you and a lot of the reasons they do come from the heart and not from the head or because of a charitable deduction or estate planning. But, if you’re a nonprofit leader, you would be foolish if you didn’t take into account that your donors have to think about how the new tax law will affect their families and may well pause so they can get a better handle on what’s happening in their finances and taxation.
Understand the trends and how thought leaders are addressing the expected drop in funding, and inevitable decrease in services that could follow. Speak to your peers in the industry and also speak to your supporters. Figure out ways to give donors the space they need to understand their tax issues, but also continue to help your organization. It’s essential as a nonprofit leader to have frank conversations and be open about the choppy waters that may lie ahead.
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