How Will the New Tax Bill Impact Nonprofits?
By: Lisa Keitges and Katie Nickels

Three months into the new year, the highly anticipated GOP Tax Bill (H.R.1) is in full effect. Below, 
we look at how the new tax regime may impact individual and corporate giving, and steps nonprofits can take in response to new opportunities. 

We have studied the key provisions that took effect on January 1, 2018. A few of those provisions are as follows: 
1. The standard deduction doubled from $6,350 to $12,000 for individuals, and $12,700
to  $24,000 for married couples. 
2. The charitable contribution deduction limit rose from 50% to 60% of an individual's adjustedgross income (AGI). 
3. The estate and gift tax exemption doubled for single-filers from $5.5 million to $11 million and up to $22.4 million for married couples. 
4. The corporate tax rate has been reduced from 35% to 21% on all profits, which is 4% lower than the global average corporate tax rate. In theory, this should make the US more globally competitive and help keep more corporate profits in the US.

What Does This Mean For Nonprofit Fundraising?
We first want to emphasize that we have looked at the likely impact of the tax changes from our perspective as fundraising specialists. Nonprofits and donors should consult with their tax advisor before making any tax-related decisions.

According to the Congressional Joint Committee of Taxation, the new tax bill will reduce the number of Americans who itemize their taxes (currently about 30 million people) from 33% of taxpayers to just 5%. Because of this, the resulting reduction in annual giving has been estimated to be anywhere between $13 billion and $20 billion. This drop would wipe out the philanthropic growth since 2015.  Planned giving may also be impacted. Although no formal models have been produced to predict the actual impact of the new estate tax exemption on charitable giving, it is estimated that lowering the tax burden on heirs will reduce the incentive of wealthy Americans considering a gift to charity as part of their estate by up to $4 billion per year.

Swings And (Corporate) Roundabouts 
However, reductions in individual giving may be more than offset by the gains to corporations, many of which have been left with more cash thanks to the corporate tax cut. Several large companies have already announced significant increases in their contributions, so we may see an increase in the amount that corporations give. However, it's important to note that corporations may be less incentivized to lower their tax bills with charitable donations.

Will Local Charities Bear The Brunt? 
These changes to the law may impact some charities more than  others,  in particular local and  commu nity -base d organizations.  It's shown that  these types of organizations benefit from the 
philanthropy of  middle-income Americans to a larger extent. It's  been speculated that  this giving cohort may be less philanthropic  this year, and in future years,  due to the increased standard  deduction (therefore less incentive to  itemize their deductions).
F ive Places To Focus In 2018 
In all of the uncertainty around tax changes, we've included a few recommendations below that will help you navigate this unsure time. 

1. Aim High and Low
Under the new tax bill, nonprofits risk losing donors who gave above the 2017 standard deduction but now fall below the increased deduction. With less of an incentive to itemize, will donors change their behavior?

Regardless of how these donors behave, there are two groups you should consider ramping up your efforts around -- low-level donors through direct mail and annual appeals (more below) and major gift prospects and donors capable of making charitable gifts of $12,000 or more each year. The new tax rates and resulting strong market mean high net worth individuals are likely feeling flush, and may be ready to give.

  2. Ramp Up Direct Mail and other Annual Appeals
It's well known that direct mail and low-level annual appeal donors give because of the mission, not the tax benefit. Take the time to thank them for their contributions, and make the case why you need their support now more than ever. They want to support you: give them the reason to invest more deeply.

  3. Consider Your Corporate Strategy
Since the jury is still out on how corporate donations will be impacted, it's important that nonprofits remain thoughtful and flexible. Ask your current corporate donors how the new tax law is impacting their future giving decisions - and create strategy around their answers. Is there an opportunity to ask for an increased annual gift, an event sponsorship, or to pursue that donor who declined in the past?

  4. Make Your Case to Foundations
Reevaluate your relationships with your foundation donors - they may now be in a position to give more.  Reconnect with your contacts and make your case as to why your organization needs their long-term support. 

  5. Invest in Relationships and Market Your Mission 
Your mission is important, and that does not change with the changing tax laws.  Make sure the right people feel connected to your mission by investing in fundraisers that are relationship builders. Constant outreach is important and personalization matters. Make people feel valued, bring them in to see your work in action, and above all, thank them for their part in realizing your mission.

As the impacts of this new law start to surface, return to the basics of fundraising -- look at your donor groups, find your opportunities, and make your case. If you'd like to discuss these recommendations in more detail, please be in touch. 

OAI's Senior Associate Director, Derek Rogers, offers actionable insights to fundraisers who inherit a Major Gifts portfolio.  Read more .

OAI Managing Director, Craig Shelley, outlines the key attributes of transformational fundraising campaigns - a big idea, an inspirational team, and prospects with the capacity and affinity to make the lead gifts.  Read more .


OAI Director, Business Development,  CJ Orr  and Operations Manager, Ali Hussain's article on bitcoin and what nonprofits need to know was featured on the GuideStar blog.  Read more .

OAI's goal is to build strong, enduring relationships with clients that allow us to get to know them from the ground up and the inside out.  While we're always excited and proud to announce new partnerships, we wanted to give a special shout-out in this newsletter to selected partners with whom we've recently renewed our contracts, or expanded our services. 

OAI has worked with the Marriott Foundation For People With Disabilities  for the last 17 years to produce and fundraise for its annual Bridges Gala.  Through our work with the Marriott Foundation, OAI has helped the Bridges Gala become a record-breaking fundraiser.  Since the start of our partnership in 2000, the Gala has raised over $20 million for the organization, including the record-breaking $1.94 million raised in 2017.  We are excited to partner with the Marriott Foundation again in 2018 for another spectacular event! 

City Harvest  pioneered food rescue in 1982, and this year, will collect 59 million pounds of excess food and deliver it free of charge to 500 soup kitchens, food pantries, and other community food programs across New  York City, helping to feed the nearly 1.3 million New Yorkers  facing hunger. In addition, City Harvest's Healthy Neighbor hoods initiative addresses long term food insecurity through community partnerships that work to increase access to affordable and wholesome food.

At its Spring 2018 Gala, City Harvest will be commemorating its 35th anniversary of feeding hungry New Yorkers.  OAI is undertaking a comprehensive fundraising program to help City Harvest grow its rev enues  by supporting gala leadership, and identifying, cultivating, and soliciting potential individual, corporate  a nd fo undation supporters for the gala. We will also provide guest management services and formulate a  post-event wrap-up strategy to maximize the ongoing relationships with key gala sponsors and attendees. 

One of the oldest not-for-profit home health care agencies in the country,  Visiting Nurse Service of New York (VNSNY)  is a vital part of New York's public health infrastructure. Now in its 125th year of operation and in partnership with the city's world class hospitals and medical centers, VNSNY has grown to serve nearly 50,000 of New York's most vulnerable, every day.

VNSNY came to OAI seeking a partner to help develop a strategy to increase revenues and increase outreach to donors for the organization's 125th Anniversary Gala in November 2018. VNSNY's vision is to create a unique event at which guests learn more about VNSNY, feel proud to support its mission, and are eager to attend again in 2019. 

In partnership with VNSNY, OAI is developing a road map to identify gala leadership and secure  donors leading up to the event. We will also be working with VNSNY to develop and design an  unforgettable event that achieves or even exceeds VNSNY's fundraising goals.
Ask a MentORR
Are you a young professional new to the world of nonprofit fundraising? Just secured your first nonprofit fundraising job? Or still finding yourself facing the same roadblocks and challenges after several years in the job?

We invite you to join Orr Associates, Inc. (OAI) on Friday, April 20, 2 - 4 pm at our DC office for our inaugural Ask a MentORR event. We are hosting a group dialogue for a small group of nonprofit fundraisers with 1 - 5 years' experience. This will be a chance to air challenges and receive real-time counsel, both from peers at other nonprofits, and from the junior team at OAI, which has experience across a wide range of nonprofit organizations.

Space for this complimentary event is limited to one person per nonprofit organization. Click here to apply for a place, or for more information, please email Derek Rogers.   


OAI welcomed Angela Mestre as an Associate in February. Prior to becoming an Associate, Angela interned in our New York office. Angela is originally from Arlington, VA and graduated from Columbia University, where she earned her bachelor's degree in Sociology and Economics. Angela will be working with the Visiting Nurse Service of New York, the Diabetes Research Institute Foundation, and New Profit. We're excited to have her on board. 

Responding to the increasingly complex burdens on nonprofit leaders, OAI has developed a transformational approach to fundraising and strategy consulting.  Our teams of experienced professionals seamlessly embed themselves with nonprofits to fundraise, to recruit and improve board leadership, to build consensus and direction through new strategies, and to provide executive, fundraising, and financial leadership.  With offices in Washington, DC and New York City, OAI has partnered in our clients' success for more than 25 years, helping more than 600 nonprofits raise hundreds of millions of dollars for their causes. 


See how we can help you today at   



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