October 11, 2019
Are you Ready? Preparing for Year-end Giving
Believe it or not, it’s that time of year again. It’s time to start planning to encourage your donors to make gift before the end of the year! We hope that you have been encouraging giving throughout the year. Even so, many donors discover, due to summer vacations and various other reasons that they have fallen behind on their pledges. The last few months of the year are a great time to send giving statements to your donors as gentle reminders of their previous commitments and to remind them about additional ways to give.
Cash or checks are no longer the only way your donors can offer their financial support. Through letting people know that they can make many different types of gifts, the leaders of your parish can help many people become more generous and help donors to benefit themselves as well. Making sure that people know that your parish can accept many different types of gifts is an important factor in enhancing your year-end giving as well as giving in the year to come! If parishioners know the congregation can accept many types of gifts, it will help your parish meet your donors where they are now both in their life stage and personal context.
Here are ideas, tools and important points to remember as you raise awareness about some of the more common ways donors are choosing to make their gifts.
Updated giving card
Just in case your parish is a bit behind in getting your Fall Campaign under way for 2020 pledges, you are more than welcome to use ECF’s new template giving card which notes many different ways to give. (You could also use this template next year if you have already developed your 2020 giving card.) Here’s a link to a new template giving card.
When people move into new life stages, like retirement, their congregations often benefit from their greater availability for volunteering and giving. However, many parishes are missing out on a great opportunity to encourage generosity among many of their more senior parishioners. One of the easiest gifts to encourage is a Qualified Charitable Distribution (QCD) from Traditional IRAs. When people reach 70 1/2 years old they must take Required Minimum Distributions (RMD) from many tax-deferred retirement accounts. Those who have Traditional IRAs (QCDs don’t apply to other types) are able to make a direct gift to your parish and have it count toward their RMD, up to $100K. Most parishes have a significant senior population, and you may truly help those Baby Boomers arriving at that threshold-age by having them make this gift directly to you. Making the gift directly to charity avoids the donor paying taxes on that additional income which they are now forced to take! Remember, parishes should still send a ”thank you” as a confirmation to givers when they receive these checks; just be aware that since it is non-taxed income, the giver does not receive a tax deduction. This is a fast-growing way for seniors to give. Take the time before year-end to raise this awareness and to help people plan for next year, too.
Even with all of the recent volatility in the stock market, many folks in your parish are holding appreciated securities which they could give before the end of the year, receiving a substantial tax deduction plus avoiding paying capital gains on the asset’s appreciation. Many of your members, young and old, have highly appreciated marketable securities on which they would owe capital gains taxes if they sold them to make a cash gift. If the parish can accept those securities directly as a gift, that will benefit both the donor and the parish. Gifts of appreciated marketable securities from donors could go toward pledges or other special gifts. If your parish has a brokerage account, you could easily accept those gifts before the end of the year.
Here is some template text from ECF which you may use for encouraging both QCDs and gifts of appreciated securities.
Without getting into all of the details, the recent tax law changes will cause fewer people to itemize their tax deductions. Through 2017, about a third of Americans itemized deductions. Now that the standard deduction has increased, that number is expected to decrease to less than 10%. The good news, due to the long history of support of religion in the US, few people expect this change to reduce giving substantially to churches, but the change may encourage some people to ”batch” or ”bunch” multiple years of giving into a single year when they do choose to itemize. (Many charities and churches witnessed significant advance-giving at the end of 2017 in anticipation of the tax change.) Due to concerns that churches are not disciplined enough to save those advance-year-gifts, few people will choose to make multiple years of pledges at once, but be aware that some may. Before year’s end, be sure to let your donors know they have that option, if this is right year for them to do it!
A related change which is already taking place is that more people will create Donor-advised Funds (DAF) for their charitable giving. DAFs are like a charitable check-book, where people make a current tax-deductible gift to a sponsoring charity and then advise that sponsor to make future grants to the charities of their choice. The use of DAFs will likely continue to grow due to the changes in the tax law which may encourage some people to itemize deductions and ‘bunch’ their giving only in selected years.
You can also encourage members who already have DAFs to make grants to your church before year end, as long as they do not "pay off" any obligatory pledges. For church leaders, if you receive a DAF grant, you should still send a send a letter of thanks recognizing the grant, but there is no additional tax deduction for the donor when the grant is made. Your members with DAFs can also set up recurring weekly or monthly grants for more regular giving, too.
Are there gifts you should not accept or encourage before year end? That will need to be the topic of a different article, but by encouraging the common ones above you will help many of the members of your parish be more generous in offering new resources for your parish’s many ministries before the end of the year.
Each of you must give as you have made up your mind, not reluctantly or under compulsion, for God loves a cheerful giver. 2 Corinthians 9:7 (NRSV)