Fundraising Strategies During COVID-19

May 13, 2020 | Adam Osborne

Adam Osborne's portrait

By Adam Osborne, CPA, CGMA

While trying to maintain focus on their missions, nonprofit organizations and higher education institutions face massive uncertainty amid the novel coronavirus (COVID-19), including financial hardship, layoffs, remote work arrangements, shelter-in-place orders, and other regulations. Many nonprofits have suffered significant losses specifically related to the cancellation or postponement of fundraisers and events that may take years to reestablish. Here are a few ways nonprofits can minimize the potential effects of COVID-19 to their organization.

Educate your donors

The Coronavirus Aid, Relief, and Economic Security (CARES) Act initiated some changes for charitable giving on personal and corporate tax returns. There are three provisions nonprofits should educate their donors about:

  • New Deduction Available: Up to $300 per taxpayer ($600 for a married couple) in annual charitable contributions. This is an “above the line” deduction available to individuals and married couples who take the standard deduction. This will reduce a donor’s taxable income. A donation to a donor advised fund (DAF) does not qualify for this new deduction.
  • New Charitable Deduction Limits: As part of the CARES Act, individuals and corporations that itemize can deduct larger amounts of their contributions. Individuals can elect to deduct donations up to 100% of their 2020 AGI (up from 60% previously). Corporations may deduct up to 25% of taxable income, up from the previous limit of 10%. The new deduction is for gifts that go to a public charity while the old deduction rules apply to gifts to private foundations. The higher deduction does not apply to donations directly to a DAF.
  • Food Inventory Donations: The deduction limitation applicable to contributions of food inventory made during 2020 by trades or businesses to 25% (up from 15%) of the taxpayer’s taxable income (in the case of a C Corp), or the taxpayer’s aggregate net income from such trades or businesses.
Use Technology to maintain sponsorship and donations

Technology as a way to stay connected is more prominent now than ever. Leverage social media to initiate a fundraising campaign. Let your donors who regularly contribute this time of year know you’re still open to their support and how they can support. Share amounts you typically get this time of year and share how you use those funds along with the impact a lack of funding would have on your organization’s mission.

Nonprofits could also create virtual events, such as online biddings, to create a sense of community and incorporate elements of events people typically look forward to.

The concept here is to be honest with donors and the community you serve. Everyone is more willing to help when they know the total impact a donation has on the organization and its ability to serve their community.

Start planning now

It is easy to focus on the now and not the future during these times. However, it is important to continue your strategic planning for the year and to stay on track by staying in touch with your donors now.  By effectively communicating with donors and the community as a whole, you can position yourself to weather the storm.

For additional insights to help you and your organization during this challenging time, contact your financial advisor.