Posted October 1st, 2004

How Will Your Year End?

Even though the environment in which we raise funds still contains much uncertainty, 2004 is shaping up to be one of the strongest years ever for philanthropy in America. See page 1 for more information on current trends.

After several challenging years, charitable giving is reported to have topped $240 billion in 2003—and there are strong indications that 2004 will be even better. How the year ends for your organization is up to you. Read on for tips on making the most from the last quarter of 2004.

Happy days are here again?

A number of recent reports include findings that bode well for charitable giving this year. Consider the two from the Center on Philanthropy at Indiana University discussed on page 1. The most recent Philanthropic Giving Index (PGI) survey had the greatest one-year increase since the survey began.

According to a second report from the Center, the number of million dollar gifts from individuals rose over 30% in the second quarter of 2004, compared to the same period in 2003. As this rise is most likely due to the improving economy, it is reasonable to assume that the latter half of 2004 will bring a similar number of gifts of this size.

In a similar vein, Forbes magazine has just released its list of the 400 wealthiest Americans. According to these findings, there are now 51 more billionaires than at the same time last year, and the total net worth of these 400 individuals topped the $1 trillion mark for the first time since 2000.

Earlier this year the Association of Fundraising Professionals released another report that holds good news for fund raising. The annual report, entitled “State of Fundraising Survey” and based on 3,000 surveys, found that nearly 3 out of 4 charities raised the same amount of money or more in 2003 than they did in 2002. Overall the results reflected a much stronger fund-raising performance than in the prior two years. Over half of the respondents reported that their organization raised more money in 2003 than in 2002. Only about a quarter of respondents reported raising less money. Overall, charities raising more than $1 million did better than those raising less than that amount.

Full steam ahead

In light of this generally positive news, many fundraisers may be tempted to relax their efforts. But 2004 is not yet over. We are now in the very critical final quarter of the year. Deadlines for fundraising goals set earlier in the year lurk just around the corner. Now is the time to carefully look at your fund-raising plans for the remainder of the year and consider strategies that may add that extra margin of excellence to your gift development efforts.

Pay particular attention to major donors and those with the capability of making larger gifts. For most organizations, this group will be small in number—perhaps a hundred or less or the top few percent of a larger donor file. Success with this group requires strategies different from those used with the masses of your donors. Invest the time required to create individualized proposals where appropriate, personal visits, invitations to special events, and other initiatives. The extra time and other resources invested in these efforts should be returned many times over.

Additionally, do not overlook the year-end dead-line for tax deductions. In recent years the number of persons who itemize their income tax deductions has risen to over 30%. The majority of your major donors will be itemizers, and charitable gifts made before December 31 provide one last chance to reduce their 2004 tax bill. See page 7 for ideas on how to help reap the most from the final months of the year.

Sooner rather than later

Some of your best donors may provide you with special challenges that require more time to ensure that they receive the maximum benefits allowed. For instance, a handful of donors may hit the maximum that they can deduct for charitable gifts this year. Gifts from this group should be structured in installments to allow the maximum in tax savings. Other individuals who sold a business or a large amount of assets and thus have an unusually high income for 2004 may find that the limits on high-income earners should affect the timing of their gifts. Other donors who are subject to the alternative minimum tax may be surprised and pleased to learn that charitable gifts can reduce their tax bill. Additionally, prospects for gifts of real estate should be contacted sooner rather than later in order to allow time to consider environmental and title issues.

If you identify donors with the capability of making larger gifts early enough to help them plan their gifts most effectively you may be able to salvage a gift that would otherwise be lost for lack of time to work through the details.

Maintaining relationships

For the very top end of your donor constituency, it is important to provide information to assist them in making immediate gifts this year-end. But make it clear that their support is important to you in the future as well. To maintain relationships over time and encourage planning for the future, consider providing an additional acknowledgment for tax reporting purposes in January or providing information to assist them with gifts that may be appropriate in the new year. For example, the Sharpe booklet “A Guide to Giving in 2005” might be sent to a select group of donors to assist them with all of their giving plans. Such a mailing moves beyond transactional fundraising and helps develop personal and long-lasting relationships.

Similarly, contact existing planned gift donors regard-less of their current level of giving. A legacy society mailing or recognition event may be appropriate in many instances, but do not forget the impact of a personal note, seasonal greeting card, or telephone call, especially during the holiday season. Careful time management can provide surprising results. For instance, if you were to plan two extra phone calls each morning and afternoon, you could personally contact your organization’s top 100 current donors over just a five-week period.

Practical ideas

Those with mature planned gift development efforts may be interested in the fact that in recent years there appears to have been significant growth in the number of donors who have funded multiple gift annuities. Capitalize on this trend by sending your gift annuity and charitable remainder trust donors updated proposals based on their current ages.

As pointed out on page 1, trends in charitable giving are closely tied to the economy. If the stock market edges higher at year-end, be prepared to promote gifts of appreciated securities for both current and deferred gift purposes. Take time now to determine your best prospects for these gifts so you will be prepared to act quickly if the market moves upward.

Time spent during the next few weeks to carefully consider your plans for the year’s final quarter can make the difference between a good year and a great one. Make sure that every member of your fund-raising team is on board. Discuss changes or additions to your plans at staff and management meetings. Involve other offices that can help you. For example, the legal or finance office may be able to facilitate estate and trust distributions prior to the calendar year-end. Senior members of the management team or board may be able to assist you with key calls.

For the past several years many organizations have felt as if they were running as fast as they could simply to stay even. Now that the fund-raising conditions are improving, higher levels of success are likely for those who work for it.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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