Understanding the Changes to Unrelated Business Income

By Jeffrey A. Kowalczyk, CPA, CFE, CGAP

Year-end giving is historically the most critical period for charitable foundations. Movements like Giving Tuesday help nonprofits gather donor funds through a lot of social fanfare, while the holiday spirit inspires others to give generously to their favorite causes. This surge in giving helps many nonprofits finish strong – but there’s a lot to uncover when it comes to a donor’s intent to give.

What started as a huge question mark, is ending the year on a positive note. Early in the year, changing tax laws caused many to speculate whether taxpayers would lose their incentive to give. However, in the wake of wildfires, hurricanes, and floods, the opposite appears to be true. According to survey data released by Classy, an online and mobile fundraising platform for nonprofits, 48 percent of those surveyed feels disaster relief is a cause needing support, the highest percentage of all causes included in the survey. The Classy survey revealed that “nearly half of consumers (49 percent) plan to donate more money to charity than they did in 2017.”  This data varies based on income level, but the message is clear, donors are motivated to give.

When it comes to charitable contributions, the survey also found that the donation experience plays a significant role in a donor’s level of trust in an organization, as well as their likelihood to give. As new generations emerge in the philanthropy landscape, nonprofits shouldn’t be surprised to hear that technology – the ability to give electronically – often tips the scales for millennials and Gen Z donors. In fact, more than half of consumers (53 percent) prefer to give online, regardless of their generation. Nonprofits should focus on improving their digital giving experience if they want to gain more trust in 2019.

Americans are certainly proving their mettle this year, but it’s important to note that while many have already committed to fundraising and relief efforts, there are still some who are sitting on the fence. According to Classy, personal or family connections to a cause, recommendations from social media influences, ease of donating, and negative media coverage heavily influence donor spending. The survey findings also indicate that disaster relief is a top cause for both Democrats (47 percent) and Republicans (42 percent).

The experts in our office are here to help you uncover ways of getting in front of new donors – give us a call today!

Jeffrey A. Kowalczyk, CPA, CFE, CGAP
Partner
302.478.8940
JKowalczyk@btcpa.com