The charitable deduction headlines are confusing.  The final outcome is unclear.  What better time to communicate with your donors?

Warning:  Charitable deduction facts in this blog post may time-limited.  The donor communication concepts are not.

Donor communication stances

1.  Non-expert “head’s up”

Your goal is to let your donors know you are thinking about them and to refer them to expert information sources. Your communications do not try to explain the charitable deducation rules.  Instead, they focus on the process, i.e., when might the next decision be made, and recommend expert resources to which your donors might want to refer for additional information.

One information source you may want to consider: The Tax Policy Center, which is a joint venture of the Urban Institute and Brookings Institution — http://www.taxpolicycenter.org/.

2.  Non-expert, but communicating expert information 

We understand from <source 1> that xxxxxxxxxxxxxx.  If there are differing points of view, you might add: <Source 2> tells us yyyyyyyyyyy.  You don’t have to solve the problem.  It is acceptable to share the confusion and commiserate.

You may; however, be able to highlight some of the basic incontrovertable facts, e.g., “As of today’s date, donors with household incomes under $300,000 (and individuals under $250,000) are subject to the same charitable deduction rules that were in place in 2012.  But we’ll have to wait see what happens over the next sixty days.”

3. Expert:  Your nonprofit is on top of the issue.

Your organization quickly reviews the “charitable deduction rules” and becomes an interpretation resource.  The Tax Policy Center cited above is one such example.  Understandly, charitable deduction expertise and the requisite tax law and accounting knowledge is outside the mission and scope of most organizations. 

What about major donors?

As of January, 2013, there is a charitable deduction divide.  Some of the headlines proclaiming victory tor the charitable deduction fail to explain that the Pease limit, which had expired in 2010, is back. For higher income donors, Pease creates a limit on total itemized deductions, which includes the charitable deduction.  (Do refer to www.taxpolicy.org for details).  To further confuse the issue, the legislation that was passed in early January may be amended over the next sixty days as “fiscal cliff” conversations continue on Capital Hill.

If you are someone who speaks with major gift propsects, you probably want to have an answer ready–especially while the topic is “hot.” Using a paradign similar to the one described ablve, you might refer the donor to a trusted source.  Or, if you are comfortable with the information, relay your understanding directly.  Be certain to cite your source, unless you are, in fact, the expert.