How Nonprofits Should React to the New Tax Law

by Scott Paley

Is the new tax law making your anxious? You’re not alone. Will our worst fears be realized and way fewer people will donate? Or simply donate less? Or will philanthropists now have more to give? Time will tell. But here’s some advice on how you can get proactive and put yourself in the best position to succeed…

Is the new tax law making you anxious? You’re not alone.

What will the impact be? This question is coming up everywhere we turn – emails from readers, conversations at nonprofit conference room tables, and certainly in our Nonprofit Leadership Lab. In the Lab, it’s been such a big topic, we’re working to bring in a tax expert to help us make sense of it all.

(Side note: if you’re curious about the Lab, which is designed to support leaders at smaller nonprofits, there’s a lot of information available here.)

Will our worst fears be realized and way fewer people will donate? Or simply donate less?

Some have argued that wealthy people will have more disposable income and actually donate more, offsetting other potential losses. It’s possible that some – even many – nonprofits will see an increase in revenues this year.

For now, we can only speculate. Time will tell.

But one thing I know to be true is this. It’s time to take a renewed look at how we approach fundraising. Any strategy that relied on the tax deduction is going to be a whole lot less likely to work.

So what should we do instead? Here’s a hint… think about New Year’s Eve.

THE EXACT WRONG WAY TO FUNDRAISE

How was your New Year’s Eve? Did you go to a party?

I did. A friend invited me and, even though I barely knew anybody there, I decided to go.

I spent the entire time begging the other guests – these total strangers – for donations. What a great chance to get that last-minute tax deduction, I told them. It’s a great cause, and we really need your help. We might not make our end-of-year fundraising goal if we don’t raise at least $5,000 more.

How did it go? Well, after about an hour, I had raised a little bit of money, but then a bunch of people complained, and I was asked to leave. On related article checkout this link on how you can get IRA services for the workforce.

OK, I’m just kidding. I didn’t do any of that. Can you even imagine?

And yet that’s essentially the way many nonprofits approach online fundraising.

TRANSACTIONS VS. RELATIONSHIPS

The old tax code gave an incentive for transactional relationships between nonprofits and donors. You didn’t have to care all that much about an organization to decide to donate. You can do some good, feel good about yourself, and cut your taxes by quite a bit. Not bad.

Now, with the new tax law, way fewer people will itemize, which means they will no longer have the same financial incentive to donate. Love it or hate it, it is what it is. We have to live with the consequences, good or bad.

And one consequence (and in my view it’s a good one) is that more than ever, you MUST focus on building relationships. You can’t hit up total strangers to give you money. First, you have to make your donors feel like a million bucks.

My expertise is in digital marketing, specially on SEO marketing services, so for the rest of this post I’m going to focus on that. And more specifically, I’m going to focus on social media.

I believe that the new tax law has only made strategic social media marketing that much more critical. Social media works best when you’re being social rather than transactional. People spend time on social media to be entertained, informed, and social…not to be solicited.

SOCIAL MEDIA IS GOOD FOR WHAT?

For nonprofits, social media is best for:

  • Introducing people to an issue or cause
  • Spreading a quick (and often passing) thought or idea
  • Reinforcing pre-existing beliefs
  • Reminding people of the great work you’re doing
  • Nurturing and deepening relationships over time
  • Connecting people who otherwise would never have met
  • Investing people with a sense that they’re part of something bigger than themselves

What is social media NOT good for? Sorry to say, but it’s not usually so great for donations, sales, or other kinds of transactions. (There are exceptions, like the Red Cross immediately after a natural disaster, or the “lightning-in-a-bottle” ice bucket thing from a few years back.)

That’s the thing about social media. It’s SOCIAL. It’s right there in the name.

FACEBOOK IS LIKE A NEW YEAR’S PARTY

So how do you build a fundraising campaign via social media? First of all, stop thinking so much about how to ask people on Facebook for money. Just like me, you’d never walk into a New Year’s party, go up to a bunch of people you barely know, and ask them to donate to your org. Would you? Why do you think it’s any different on Facebook?

Facebook is a lot like that New Year’s party – at least at first. Use it as an entree to a relationship. What you want to do at a networking party is start a bunch of interesting conversations that make people want to continue the conversation. And then, make sure to get their business cards or phone numbers so you can do just that.

In the digital world, that usually means getting email addresses. But why would somebody want to give that up? Just like at the New Years party, you’re only getting a phone number if you’re interesting, insightful, charming, clever… if you share something in common. You have to give a reason to connect with you.

Create something that would be irresistible to your ideal audience and give it to them for free in exchange for an email address or for joining a Facebook group. Or if you’re feeling ambitious, take a look at “Messenger bots,” coming soon to “Joanlandia” (that’s insider speak for the world of Joan Garry.)

All of these give you permission to start an ongoing relationship.

WHAT IS IRRESISTIBLE?

It could be something useful they can download. Or just something fun. Whatever it is, it needs to be something they want enough to give you that email address. You need to be interesting.

And you know what’s really interesting? A great story, right?

So tell a TON of stories – but NOT stories about how great you and your organization are. That’s BORING. Instead, use stories to help teach people about the issue you help solve, to demonstrate why it’s important… why it matters, and that it IS possible to do something about it. Provoke outrage. Provide hope.

Joan had Alex Blumberg (the CEO and co-founder of Gimlet Media) on her podcast not so long ago. He’s a master storyteller. You’ll get great storytelling ideas if you listen to that episode.

You want to tell stories that highlight the heroes in your world. Who are they? Could be clients. Volunteers. Staffers. It really depends on your organization.

WHO TELLS YOUR STORY?

Try this. Brainstorm at least 10 things you’re really proud of from this past year. Things you achieved in 2017 that made a real difference. Reviewing that list, which stories will somebody else, who isn’t involved yet with your organization, find most interesting and engaging and exciting?

You’re looking for people who get it and are predisposed to like what you’re all about. You won’t attract everyone, but that’s not important. You want to attract the right people.

Then, consistently tell these stories on Facebook and in emails and everywhere else you have an audience.

Once you have that, deepen the relationship. Again, think about real life. You left the Near Year’s party and 10 people gave you business cards and want you to follow up. What reasons can you come up with to do that? Now translate that to the digital world. What’s the path look like?

Make it really easy for people to start participating. How can you get them started online? And once you have people doing those things, create a way to track participation. Provide deeper opportunities to those that do participate to do more. And I don’t mean simply to donate (though some may).

More than any other topic, most people love to discuss themselves. So ask them what they care about. Get them talking. That will trigger engagement online, which is critical on social networks like Facebook, if you want anybody to see your posts. So how can you encourage your growing audience to participate, not just to consume your content?

And in this process, you’ll start to learn a lot more about what triggers people to deeper participation. You may find yourself surprised. Just make sure to keep it simple. People have limited attention spans online.

YOUR NEXT STEPS

Bottom line – whether you focus on the digital world or not, the key to nonprofit success is in relationship building. While this has always been true, the new tax law makes it even more so.

So try the New Year’s party exercise. You have an opportunity to network and schmooze with (let’s say) a hundred folks, in person, most of whom you’ve never met before. You want to promote and market your nonprofit.

How would you start? What would you say? What would you offer? How would you begin new relationships?

And then, what would you do to keep them going after the ball’s dropped and the champagne is gone?

Have you seen any impact yet from the new tax bill? What changes are you making as a result?

6 thoughts on “How Nonprofits Should React to the New Tax Law”

  1. The New Year’s party exercise is one of the most invaluable tools/processes in my consulting toolkit — which is chock full of Joan’s wisdom & humor!
    During the Holiday Season more than ever, our thoughts turn gratefully to those who have made our progress possible. In this spirit, I want to say thank you and Happy New Year!
    I wish you continued success in 2018 and I’m optimistic that the blessings of this holiday season will continue to fill your hearts, homes and business throughout the New Year.
    “The point of living and of being an optimist, is to be foolish enough to believe the best is yet to come.” [Peter Ustinov (1921 – 2004)]

  2. Thanks for a great synopsis of the current situation. Sharing it with Board, staff, and other NPO’s in my community so that we can all approach giving reasonably, effectively, and calmly given the “hype” already being discussed.

  3. Sounds like a good plan. The situation is what it is. We can all debate about the impact, but only time will tell. The important thing is to consider strategies for fundraising that we can all implement, regardless of the tax situation.

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