Last week I was asked to participate on a panel discussion regarding the future of fundraising in America. While there are a number of dynamics at play, I think the following are the three areas every fundraiser should keep an eye on.
The Charitable Tax Deduction
Tax reform has been an increasingly hot topic over the years and it promises to be high on the agenda of the next administration. In each iteration of tax reform, the charitable tax deduction has been on the table with a variety of recommendations.
For example, over the last eight years, the Obama Administration has tried to cap the charitable tax deduction at 28%, even though most charitable dollars come from individuals whose tax bracket is higher. In addition, in 2010 the National Commission on Fiscal Responsibility and Reform (also known as the Simpson/Bowles Commission) recommended doing away with the charitable tax deduction as we know it and replacing it with a “12% non-refundable tax credit available to all taxpayers; available above 2% of Adjusted Gross Income (AGI) floor.”
Over the years we have surveyed Americans to get their opinion on the charitable tax deduction and in the last survey (January 2015), 54 percent opposed limiting, capping, or eliminating the deduction and only 35 percent favored changes as part of tax reform. Reflecting this mood, Senators John Thune and Ron Wyden introduced a bipartisan bill this year protecting the deduction.
Again, something to keep your eye on in the coming year.
Donor Advised Funds (DAFs)
While donor advised funds have been around for decades, in the 1990s they increasingly became a financial planning and planned giving tool. They allow a donor to place sums in the fund and get a full deduction (up to 50 percent of AGI) in the year the contribution is made with the distribution to a charity or charities in a future year.
There is a growing debate about the amount of money sitting in DAFs as, according to the National Philanthropic Trust, at the end of 2014 there was $71 billion in these funds (up from $34 billion in 2010) with only $12.49 billion in grants from these funds in 2014. Some are calling for more regulation.
Something to watch.
Donors Going Mobile
As our most recent study has shown, mobile usage by donors is exploding. Today, only 7 percent of donors DO NOT have a smartphone or tablet. Yep, 93 percent do! And they are using them increasingly to make donations. Since 2013, the percentage of donors using a mobile device to make a donation has nearly doubled so that nearly 1 of 5 donors today has made a gift in this way. Even older donors are hopping on the bandwagon, with 19 percent of Boomers saying they have given to a charity using a smartphone.
The uptake of mobile technology usage by donors is moving at breathtaking speed so, once again, if your website or giving form are not mobile-responsive, you are quickly losing out.