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January 20, 2022
Mass. Nonprofits Can Act Now in Response to the New Tax Law
By Jim Klocke

Jim Klocke
Jim Klocke
While nonprofits across Massachusetts have questions, and some anxieties, about how the new federal tax law will affect them, they can take action right now to address issues relating to fundraising, their bottom lines, and most importantly, their ability to serve people and communities.

Here are steps nonprofits should consider to remain effective and resilient in the face of upcoming changes.

Go Back to Fundraising Basics
The federal charitable tax deduction is still in place, but changes to the standard deduction could dramatically impact charitable giving. Last June, the Massachusetts Nonprofit Network (MNN) predicted that doubling the standard deduction would out at risk as much as $513 million in donations in the state annually. Fewer middle-income donors in particular will itemize because of the higher standard deduction, which could result in reduced charitable giving.

But the recent tax law changes represent an opportunity for nonprofits to return to the basics of fundraising. If you have a development plan, make sure it’s up to date, and if you don’t, now is the time to create one.
  • For some donors, making two years of contributions in 2018 will enable them to itemize deductions and receive a tax benefit from giving. Do any of your donors qualify?

  • Analyze recent fundraising activities. What worked well? How much did your organization spend to raise each additional dollar of income? How could that be done more efficiently?

  • If you don’t have a planned giving program, consider developing one.
Assess How You Engage with Stakeholders
The people you serve directly, as well as donors, board members, and others in your local community, want you to continue to succeed.
  • Start by making sure everyone on your team—managers, staff, board members, volunteers—understand your organization's mission #147; what the overall goal is and why you do it. It's vital that everyone is on the same page. Don't assume anything.

  • Current and prospective donors want to make a difference, and want to know how your nonprofit is making a difference. Share stories of impact; donors respond to compelling stories.

  • Explore ways to engage donors beyond donating. Studies have shown that people who volunteer are more likely to become donors, and donors who volunteer time to a nonprofit tend to increase the amount they give.
Advocate for Public Policy at the State and Local Levels
Your ability to serve people and your local community may be affected directly or indirectly by the projected increase in the federal deficit—more than $100 billion per year for the next 10 years—resulting from the new tax law. Not only will federal spending by under pressure, but the Massachusetts state budget, which depends on federal dollars, will likely be constrained, putting more pressure on local nonprofits.

Be alert to any efforts to reduce government support for the nonprofit sector, as well as efforts to levy new and unfair taxes on nonprofits. (Municipalities will be under the same pressure and may look to recoup reduced revenues through higher fees and taxes on nonprofits.) Your organization’s board members can play a powerful role by engaging with key government, media, private sector, and philanthropic officials as advocates for the interests of nonprofits.

Watch for New IRS Rules and Guidelines
There are a number of aspects to the new tax law that have yet to be fleshed out, including guidelines on unrelated business income tax (UBIT) and the official payroll withholding tables from the IRS. Check IRS news updates as well as advisories from the National Council of Nonprofits. Be sure also to keep current with the Non-Profit Organizations/Public Charities Division of the Massachusetts attorney general's office.

Attend a Regional Meeting
MNN holds regional meetings in every region of Massachusetts, open and free to all nonprofits #147; to network, share best practices, and collaborate. Eight meetings will be held in February and March and will focus on tax reform, including how nonprofits can prepare for these challenges and how they can take advantage of new opportunities.

If you're wondering whether a particular provision or program made it into the new tax law, check the National Council of Nonprofits’ Nonprofit Analysis of the Final Tax Bill.

Jim Klocke is CEO of the Massachusetts Nonprofit Network, which aims to unite and strengthen the entire nonprofit sector through advocacy, public awareness, and capacity building. Email for more information or call 617-330-1188.
January 2018
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