Why Donors Give: Tax Deduction

Fundraising hinges on appealing to the recipient’s reasons for giving. Consider all the ways you can leverage storytelling, imagery, and emotion in your emails. The motivation for giving is as diverse as your recipients, but research suggests most people fall into one of several categories. One of your primary goals as a fundraiser is to discover ways to tap into the motivations people have for giving. In this series of blog posts, we discuss motivations for giving and how your organization can best reach these types of donors. Today, we’re talking the tax deduction donor.

Donor Motivation: Tax Write-off

Some donors simply give because there are tax benefits to giving. The charitable tax deduction drives many donations, especially near year-end. Wealthy individuals may give because of the enormous tax benefits for their situations. Though tax deduction is a strong motivator for donations and you can use it to increase donations, you’d be missing an opportunity if you used it as sole reason for an appeal. Donors who only give for a tax deduction and don’t connect on some other level with your charity aren’t likely to be long-term, repeat donors.

This year, our tax situation has changed as the required limit to itemize one’s taxes was raised, so potentially fewer donors will give for this reason because they won’t be itemizing their taxes. There are still many midlevel and major donors who fall into this category and want the tax write-offs associated with donating to a nonprofit.

If you don’t yet have a midlevel and major donor program at your nonprofit, 2018 is a good year to focus on building it out. Though the definition of who fits into these categories varies by nonprofits, for many, a midlevel donor is one who has made $1,000 in gifts in the previous 12 months or a good-sized largest single gift of $500. A major donor may be those in the $5,000+ cumulative gifts range. Again, these are just examples, your nonprofit will have to determine the right criteria to define a midlevel or major donor.

The advantage to this type of donor is they often have a high income, a mortgage, and write-offs that will push them into a tax range where they will itemize. You can continue discussing the tax deductibility of gifts and even focus appeals around this concept to them at year end, but for the general file, you may find the appeal of “tax write-off” as a reason for giving goes down this year.

By |2018-02-16T20:19:34+00:00February 24th, 2018|Categories: Beginner, Fundraising|Tags: , , , |0 Comments

About the Author:

Jeremy Reis is the Senior Director of Marketing at Food for the Hungry, an international relief and development organization headquartered in Phoenix, Arizona. Jeremy serves on the Advisory Council for Christian Leadership Alliance, an alliance of more than 6,000 mission-focused Christians who lead in today’s high-impact Christian nonprofit ministries, churches, educational institutions, and businesses. His aim is to help all nonprofits take advantage of technology solutions to improve donor experience and fundraising.

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