Non profit Fundraising Donations at Crossroads
Updated: Jul 27
We work with non profits to find innovative ways to raise money and increase public education for a host of healthy causes. But overall donations to non-profits in America have fluctuated in recent years. Our non profit data shows in 2022, donations fell for the fourth time in 40 years, dropping 3.4% to $499.3 Billion in current dollars. This was a decline of 10.5% when adjusted for inflation, writes business development guru, James Dean.
There were a number of factors that contributed to the decline in donations in 2022, including :
The COVID-19 pandemic : The pandemic led to a decline in economic activity, which in turn led to a decline in disposable income. This made it more difficult for individuals and businesses to make charitable donations.
The tax code changes : The Tax Cuts and Jobs Act of 2017 doubled the standard deduction for taxpayers, making it less likely that individuals will itemize their deductions and claim a tax deduction for charitable contributions.
Inflation : Inflation has made it more expensive for people to live, which has left some with less money to donate to charity.
Despite the decline in donations in 2022, there are some signs that charitable giving is on the rebound. In the first quarter of 2023, donations to non-profits increased by 2.2%. This suggests that the decline in donations in 2022 may have been a temporary setback.
Although one way we connect non-profits with increased donation opportunities is by leveraging existing and new corporate sponsorship. For example, corporate employee matching gift programs are a type of philanthropy in which companies financially match donations that their employees make to nonprofit organizations. When an employee makes a donation to a qualified nonprofit, they can submit a matching gift request to their employer. If the employer has a matching gift program, they will then make a donation to the nonprofit that is equal to the amount of the employee's donation.
Overall, our results indicate the following;
- An estimated $8 Billion in matching funds go unclaimed
- About 65% of fortune 500 companies offer matching gift programs
- Nearly $3 Billion is donated through matching gift programs annually
- 85% of donors say they're more likely to give to a non profit cause if a match is offered
- Upwards of 18.5 million Americans work at companies with matching gift programs
- 35% of donors say they'd give a large gift if it was matched by their corporate employer
Corporate employee matching gift programs can be a significant source of revenue for non-profits. In fact, according to the Association of Fundraising Professionals, corporate matching gifts accounted for an estimated $1.8 Billion in donations to non-profits in 2022.
There are a few things that non-profits can do to make sure that employees are aware of their corporate matching gift program including;
1. Corporations should post information about the program on their website and in their employee handbook.
2. The company should send out regular emails to employees reminding them of the program.
3. The Corporation should encourage employees to ask their human resources department if their company has a matching gift program.
If you are an employee of a company that has a matching gift program, you should take advantage of it. It is a great way to double the impact of your charitable donations.
Here are some additional benefits of corporate employee matching gift programs for non-profits:
They can help non-profits attract and retain employees. Employees are more likely to want to work for a company that supports their charitable giving.
They can help non-profits raise more money. Corporate matching gifts can significantly increase the amount of money that a non-profit raises.
They can help non-profits build relationships with corporate donors. Corporate matching gift programs can give non-profits the opportunity to connect with corporate donors and build relationships with them.
If you are a non-profit, I encourage you to learn more about corporate employee matching gift programs. They can be a valuable tool for raising money and building relationships with corporate donors.
Social media also plays a big role in Nonprofit Fundraising Checkout Statistics :
32% of donors are most likely inspired to give via social media, followed closely by email (30%), website (17%), print (15%), TV or radio ad (3%), phone call (2%), or text message (1%).
Of those inspired to give via social media, 60% were most impacted by Facebook posts, 25% by Instagram, 5% by Twitter, 5% by YouTube, and 5% by LinkedIn.
48% of donors say that regular email communications are most likely to keep them engaged and inspire repeat donations, followed by social media communication (18%), print communication (16%), handwritten note (12%), and phone call (6%).
94% of donors say that non profits effectively express gratitude for their donations, while 93% believe organizations keep them updated on their programs.
For every 1,000 email addresses, the average organization has 474 Facebook fans, 186 Twitter followers, and 41 Instagram followers.
For nonprofits, return on ad spend was highest for search ads, at $2.75 for every dollar spent. On-average return on ad spend for display was $0.33; for Facebook / Meta $0.50; and for Twitter $0.41.
The History of Non-profits in America
The history of non-profits in America is a long and rich one. The first non-profit organizations in America were religious organizations, which were founded by colonists in the 17th century. These organizations provided social services, such as education and healthcare, to the colonists.
In the 18th century, non-profits began to focus on other social issues, such as slavery and women's suffrage. In the 19th century, non-profits played a major role in the abolition movement and the women's suffrage movement that played a major role in the continued success of America.
In the 20th century, non-profits expanded their focus to include a wide range of social issues, such as poverty, healthcare, education, wildlife and the environment. Non-profits also became more professionalized, with the development of new management techniques and fundraising strategies.
In the 21st century, non-profits continue to play a vital role in American society. They provide essential services to people in need, and they work to address some of the most pressing social issues of our time.
Here are some of the most notable non-profits in American history:
The American Red Cross: Founded in 1881, the American Red Cross is a humanitarian organization that provides disaster relief, blood donation services, and other assistance to people in need.
The Salvation Army: Founded in 1865, the Salvation Army is a Christian organization that provides social services, such as food, shelter, and clothing, to people in need.
The United Way: Founded in 1887, the United Way is a non-profit organization that raises money to support a variety of local charities.
The YMCA: Founded in 1844 in London UK, the YMCA is a non-profit organization that provides physical and social programs for young people and adults.
The YWCA: Founded in 1858 in Geneva, Switzerland, the YWCA is a non-profit organization that provides physical and social programs for young women and adults.
These are just a few of the many non-profits that have made a difference in America. They are a vital part of our society, and they deserve our support with more beneficial tax laws.
How the IRS tax code changes to the standard deduction hurt non-profits
In 2017, the Tax Cuts and Jobs Act (TCJA) began significant changes to the US tax code, including increasing the standard deduction and reducing the number of itemized deductions. These changes have had a significant impact on non-profits, as they have made it more difficult for individuals to claim tax deductions for charitable contributions.
And further changes began in the U.S. starting with your 2022 return, taxpayers can no longer claim cash donations to charity while taking the standard deduction. This is a change from last year, where those married filing jointly were able to claim $600 in cash contributions and those filing single were able to claim $300 without itemizing. The special rules that allowed above-the-line deductions in 2020 and 2021 have not been extended. You must itemize deductions in order to deduct gifts to charities.
Also, cash donations are limited to 60% of your adjusted gross income. This is a change from the last two years, where cash donations were limited to 100 percent of adjusted gross income.
Subsequently, the U.S. new tax codes have pushed many healthy grassroots community based non-profits to a crossroads now scrambling to survive. While tax codes in countries like the United Kingdom, for example, enable 100% deduction of non profit donations, writes business development guru, James Dean.
And during the years (2020 - 2022) since the COVID pandemic took a toll on many non profit organizations, unable to tangibly interact with the people most had traditionally relied on to help support the cause. Although, corporations did step-up matching employee gift programs to help supplement the healthy community activism.
Prior to the TCJA, individuals could deduct charitable contributions from their taxable income if the total amount of their deductions exceeded the standard deduction. For example, if a single filer had an adjusted gross income (AGI) of $50,000 and made $5,000 in charitable contributions, they could deduct the full amount of their contributions from their taxable income.
The TCJA doubled the standard deduction for all taxpayers. For example, the standard deduction for a single filer with an AGI of $50,000 is now $13,850. This means that the same individual who made $5,000 in charitable contributions in 2016 would now only be able to deduct $1,150 of those contributions from their taxable income in 2018.
The TCJA also reduced the number of itemized deductions that individuals can claim. For example, the TCJA eliminated the deduction for state and local income taxes. This means that individuals who live in states with high income taxes are now less likely to itemize their deductions, which means they are less likely to be able to deduct charitable contributions from their taxable income.
The impact of the changes on non-profits
The changes to the standard deduction have had a significant impact on non-profits. According to the National Council of Nonprofits, the TCJA is expected to reduce charitable giving by $1.4 billion in 2018. This is because the changes make it more difficult for individuals to claim tax deductions for charitable contributions, which can reduce the incentive to donate.
The impact of the changes is likely to be felt more acutely by smaller non-profits, which rely more heavily on individual donations than larger non-profits. In addition, the changes are likely to have a disproportionate impact on non-profits that operate in states with high income taxes.
What non-profits can do to mitigate the impact of the changes
There are a few things that non profits can do to mitigate the impact of the changes to the standard deduction.
1. Non-profits can educate their donors about the changes and encourage them to continue to donate even if they are not able to deduct their contributions from their taxable income.
2. Non-profits can focus on raising money from foundations and other institutional donors, who are less likely to be affected by the changes to the standard deduction.
3. Non-profits can explore other ways to reduce their tax liability, such as investing in tax-exempt bonds or establishing a donor-advised fund.
4. Non-profits may generate donations using eCommerce methods such as online auctions that benefit a worthy cause. Many potential donors may not want to give money, but they often have unused antiques such as art, sports memorabilia, coins, boat, automobile and other items that can be donated for auction to the non-profit. The donor may place a market value on the item to deduct at the end of the year when filing taxes.
5. Corporate employee matching donation programs can add significant benefits to the non-profit cause.
Overall, the changes to the standard deduction have had a significant impact on non-profits. However, there are a few things that non-profits can do to mitigate the impact of these changes. By educating their donors, focusing on institutional donors, and exploring other ways to reduce their tax liability, non-profits can continue to raise the money they need to serve their communities.
Why do we need healthy non-profits in America?
Grassroots non profits are organizations that are funded by individual donors, corporations and volunteers. They are often small and local, and they focus on addressing specific needs in their communities.
There are many benefits to grassroots non-profits including :
Responsive to community needs: Grassroots non-profits are closely connected to the communities they serve, and they are able to quickly respond to emerging needs.
Empowered by volunteers: Grassroots non-profits rely on volunteers to provide their services, which gives volunteers a sense of ownership and empowerment.
Cost-effective: Grassroots non-profits have lower overhead costs than larger non-profits, which means that more of the money they raise goes directly to their programs and services.
Innovative: Grassroots non-profits are often more creative and innovative than larger non-profits, because they are not bound by the same rules and regulations.
Committed to community: Grassroots non-profits are committed to building strong and vibrant communities, and they work to address the root causes of problems, not just the symptoms.
Grassroots non-profits play an important role in American society. They are often the first responders to emerging needs, and they provide essential services that would not be available otherwise writes business development guru, James Dean. They are also a source of innovation and creativity, and they help to build stronger and more vibrant communities.
Here are some specific examples of the benefits of grassroots non-profits in America :
In 2020, grassroots non-profits were on the front lines of the COVID-19 pandemic, providing food, shelter, and other essential services to people in need.
Grassroots non-profits have played a major role in the fight for racial justice, organizing protests and rallies and providing support to communities affected by police brutality.
Grassroots non-profits are working to address the climate crisis, planting trees, reducing pollution and promoting renewable energy.
Grassroots non-profits are helping to improve education in America, providing tutoring, mentoring, and other support to students in need.
Grassroots non-profits are working to address the opioid crisis, providing treatment and recovery services to people struggling with addiction.
These are just a few examples of the many ways that grassroots non-profits are making a difference in America. They are a vital part of our communities, and they deserve our support.
Our outlook for nonprofit organizations market and revenue : The nonprofit organization market was valued at $276.72 billion in 2022. Total revenue is expected to grow at a CAGR of 4.53% through 2023 to 2029, reaching nearly $377.34 billion by 2029.
First quarter of 2022, nonprofits contributed $1.4 trillion to the U.S. economy, with growth in the gross value added by nonprofits exceeding the overall GDP by 1%.
The market has shown a positive trend, with an increase of 14.31% to date.
The majority of public charities (76%) have annual revenue of up to $99,000, 13% make between $100,000 and $499,000, and 8% generate revenue of between $500,000 and $4.9 million.
Corporations gave more than $21.08 billion to nonprofit organizations in 2022, an increase of 3.4% over 2021.
Nonprofits are facing record inflation, workforce shortages, a potential recession, declining donations, and increased demand for services.
We offer unique solutions and proven success to grow your non-profit business. To discuss how we might enhance your non-profit call us 440-597-3964.