Tax Cuts and Jobs Act: 3 Most Vital Things You Need to Know


Everyone and their accountant’s cousin is talking about the new tax reform. How does it affect you and your donors? Heritage Foundation policy analyst Adam Michel calls it the “most sweeping update to the U.S. tax code in more than 30 years.”

There’s no doubt about it. The Tax Cuts and Jobs Act of 2017, effective as of January 1, 2018, brings with it a lot of changes.

By and large, it looks like many of these changes will be good for the average American home. The Tax Foundation predicts that the tax changes will produce:

  • 1.7 percent increase in GDP over the long-term
  • 1.5 percent higher wages
  • 339,000 additional full-time equivalent jobs

Let’s hope that is true. But what changes will this act bring for your nonprofit, ministry, or church when it comes to giving?

The 3 Things You Need to Know

Of course, we know that the majority of your donors are not motivated solely by tax-incentives in their giving, but changes in the tax code can influence your donor’s behavior.

So what should you do as a nonprofit organization or ministry in light of the recent changes of the tax reform?

Number 1: Keep Calm and Carry On

If you’ve been in nonprofit leadership or philanthropy for any length of time, you know that tax changes come and go with every new administration.

And every time, there’s a lot of chatter among all of us in the nonprofit world about the ramifications of tax reform to philanthropy.

Tax changes come and go with every administration. Keep calm and carry on. #nonprofit #charity Click To Tweet

By no means do I want to make light of the role of government in donor behavior. A case could be made that the success of the American philanthropic model is due in large part to the way Congress has incentivized giving to nonprofit causes through tax breaks and other ways.

But my point here is that this isn’t the first time you and I’ve been to this rodeo.

There’s no need to panic or take to Twitter and rail against the current administration.

Wherever you or I might land in our politics, negative communications about the government is often counterproductive—especially if this change happens to affect your donors positively.

Don’t be the nonprofit or ministry that tries to stir up the masses in protest—only to find out that they’re not upset about it at all.

I’m sure your cause is just as worthy of support now as before. Stay confident. Stay calm. And carry on.

Number 2: Inform Your Donors

Be the first to come alongside your donors to pass along the confidence that we just spoke about. In today’s fiercely political climate, many of your donors are hearing all kinds of contradicting information and doomsday predictions.

Be the nonprofit institution that brings a voice of hope for them.

Inform them of the changes in a peaceful, positive manner. Show them how they can get the most out of the tax changes for themselves and their families.

But also, show them how they can still partner with you to change the future of whatever mission you have.

Our friends at the National Christian Foundation have published an insightful article that you can share with donors. It will walk them through the steps they can take to advance the causes they care about, even with all the tax changes.

Number 3: Cultivate Asset-based Gifts

Once again, we see the timeless value of cultivating asset-based gifts. Almost every one of your donors stands to gain by considering donating an asset to your organization, especially before a sale.

“Even if a giver might not claim or receive a charitable deduction, he or she can still capture tax benefits by giving appreciated assets prior to a sale, and thereby avoid the capital gain tax.” – NCF’s Jeanne McMains, Vice President of Gift Planning Solutions.

The changes in the standard deduction in the Tax Cuts and Jobs Act mainly affect your donors’ liquid assets, their cash. This essentially means that the tax reform’s biggest changes will be shown in just 9% of your average donor’s wealth.

The rest of their balance sheet—the 91%—exists in the form of hard assets. And the tax incentives for giving from assets hasn’t changed much, if at all.

Cultivating asset-based gifts remains one of the best long-term funding strategies for your #nonprofit, no matter how #taxes change. Click To Tweet

While this may have ramifications for one-time, annual gifts, faithfully cultivating asset-based gifts will yield steady income for your mission, even as your annual fund fluctuates drastically.

From one administration to the next, cultivating asset-based gifts remains one of the best long-term funding strategies for your nonprofit organization.

If you’re ready to start your asset-based funding strategy, or just need some help to boost your current efforts, let’s talk! The call is free, and there’s no obligation.