THE IRS IS NOT A CHARITY

 

It’s beginning to look a lot like… end of season appeal time. Yes, December is the number one month for giving. I received five appeals this week: two from my universities, my daughter’s university (like the five-figure tuition is not enough!), and two others.

All five appeals started with – to paraphrase – “Don’t forget to give today for your 2014 tax deduction.” But do North Americans really give for the tax write-off?

The answer is no. The tax write-off is merely a nice bonus. In fact, many American taxpayers – up to 70% – do not receive any tax benefit for their donation because they cannot or do not itemize their taxes or exceed the limit on deductions. Plus, a contribution is never truly “tax deductible,” rather a portion of the gift reduces your taxable income. So, on average, for every $100 donated in the U.S., only $17 is truly a tax benefit to your donor. In Canada, it’s $17 to $23 of benefit depending the province of residency. Tax relief is not your donors’ primary, or even their secondary, motivation.

So why do folks give in December? Because donors are compassionate and generous and the end of the year is a season of charity and thankfulness, as poll after poll bares witness.

So if sending out your end-of-year appeal (and I hope you do), stick to telling your story. People give to people (or animals of course). Make sure your case includes personal stories of your impact.

And as far as the IRS/CRA, you just need to add the small print.* The big print needs to make your case.

*All contributions are tax-deductible to the full extent of federal law.

 

Sources:

http://createquity.com/2013/04/the-deduction-for-charitable-contributions-the-sacred-cow-of-the-tax-code/

17% dollars based upon the “effective” tax rate for the average taxpayer;

http://business.financialpost.com/2012/04/07/whats-my-tax-rate/

Posted by Danny Maier
Danny Maier

Written by Danny Maier

Dan Maier offers fundraising counsel and strategic management for local and national nonprofits, YMCAs, camps, medical and social service organizations. He offers invaluable support to clients and their volunteer leadership as they look to enhance their development campaigns, prepare for crisis communications, strengthen their boards and more.

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