Recent years have been challenging for many nonprofits.
More stormy seas than smooth sailing.
And, soon it's likely to be a lot worse.
Trump changed the tax code removing many tax benefits enjoyed by most charitable donors.
Now the Democrats plan the same for large donors.
Many nonprofits will not survive. Will yours?
CHURCHES, CHARITIES & NONPROFITS
The average nonprofit can expect to lose over 40% of revenue, with the hardest hit losing over 70%.
A Financial Lifeline In Economic Storms
Churches, charities, and the entire non profit sector increasingly depends on the wealthiest of Americans. Those earning over $200,000 make more than 1/3 of all charitable donations.
Yet the Democrats' are targeting these donors specifically to reduce their charitable donations.
The IRS currently reports less than 1/2 of 1% earning over $200,000 take full advantage of all tax benefits available. In fact, the wealthiest tend to be the biggest over payers of their taxes.
It's likely to only get worse for you and your donors in the future. That's why it's prudent to help your donors to help you.
It may sound surprising at first, but it's only logical, if one thinks about it.
Everyone, your donors too, think they've good advisors. But few get second opinions - at least not until it's too late. No one knows everything, nor can anyone be an expert in all specialties.
Ironically, the greater the economic activity, the more sophisticated and complicated the tax, financial, and investment strategies, the more likely it is things fall between the cracks or are just overlooked. People tend to be creatures of habit, CPAs included.
But what if your largest / wealthiest donors enjoyed the tax secrets of the super rich?
If your largest / wealthiest donors could immediately increase net after tax income by 30 - 50%, largely offsetting the Democrats' plan, wouldn't they be more inclined to make more and larger charitable donations - especially to those nonprofits & causes they already know and trust?
In Your Economic Storm, YES Can Be A Lifeline To Your Economic Security
YES provides the affluent with customized proprietary strategies to: maximize long term net worth, take their wealth to the next level, and make living the luxury lifestyle that much more rewarding. Including charitable donations.
It's not living the 'good life' if you're not doing some good.
YES, looks to share these secrets and strategies for the super rich to help support a few select churches, charities, and nonprofits. Let us know if we can help your nonprofit.
The Unintended Consequences Of Good Intentions
The road to hell is paved with good intentions.
President Biden and the Democrats effectively control the White House and Congress. The last time Democrats controlled such power they passed the Affordable Care Act aka 'Obamacare'.
No telling what may come in this current cancel culture, or the consequences a promised single payer healthcare aka 'medicare for all' will have on society, the economy, and certainly healthcare non profits.
Every Nonprofit Needs A New Funding Plan To Counter Joe's Tax Plan
But we do know the Democrats' tax plan, and it's effect on churches, charities, and nonprofits. They told us.
President Biden and the Democrats intend to make sure the financially successful pay their "fair share".
As such, they're relying heavily on Obama's playbook as he proffered 'unsuccessfully' a similar tax plan.
Specifically, now President Biden and the Democrats propose raising both ordinary income AND capital gain tax rates to 39.6% while limiting the deduction for charitable deductions to 28%.
Is Joe - A Charity Friend Or Foe?
Looking at Joe Biden's historical level of personal financial support for nonprofits, it seems he places very little value on their efforts or the services they provide.
There certainly is a segment of the Democratic Party that sees churches, charities, and nonprofits as unnecessary competitors seeking to provide services which the government is better suited to provide.
Also, reasons to remove the tax status for nonprofits vary from professing hate speech, to separation of church and state, to governments needing tax revenue to make up for the Covid-19 lock-downs.
And Democrats are not shy about destroying entire industries - if they think it will better serve their ends; coal, fossil fuels, private insurance, healthcare, etc.
So it's not surprising that at a time when the economic survival of more and more churches, charities, and nonprofits are increasingly dependent upon the benevolence of fewer donors to make larger donations, President Joe Biden promises to raise taxes on our most charitable donors.
Therefore, even most of the largest donors will soon have less discretionary income to donate to nonprofits.
Where Do You Rank?
Thus, a 1% increase in the cost of making a donation (an increase in the net after tax cost of making the donation) will decrease the total charitable donations received by the average nonprofit by 4%.
The objective of Biden's tax plan is to raise the effective after tax cost of making donations for the wealthiest and most charitable of us, by 11.6% (39.6% tax rate - 28% deduction cap = 11.6%)
But actually it's much worse than that. Because under the Biden plan, the true added cost to the donor is not 11.6% but likely much more with opportunity costs, etc. Probably more in an added 30 - 40% range. (The difference between 28 and 39 is 11, but the difference as a '%' is about 40 "percent", 28 x 1.4 = 39.2)
Consequently, the Biden tax plan designed to make sure the wealthy pay their fair share of taxes - as if they are not already while making almost 1/3 of all charitable donations- will also substantially reduce charitable donations. Especially those that planned to make their donations from capital gains.
Thus, an average nonprofit can expect to lose about 45% of their donation revenues and some over 70%.
Landing The Big Fish
We are called to be fishers of men. But as fish are different, so are men. One way 'Big Fish' get to be big fish, is they are often difficult to catch. Big Fish seldom school or hang with small fish - except to eat them.
To catch big fish, or men, the right lure is essential. And the 'right lure' changes with the environment.
At YES we are usually able to help the affluent reduce their taxes by more than 50% by finding tax code provisions that their other advisors, CPAs and attorneys overlook.
That leaves a lot of new found resources for more productive and rewarding uses such as the yachting lifestyle, investing and philanthropic pursuits.
For example, just think about your organization's largest and / or wealthiest donors.
If they were able to immediately reduce their taxes by half or even more - depending on the individual that essentially equates to about a 30 - 50%- immediate increase in net after tax income - do you think they would be inclined to make more and larger charitable donations - especially to those nonprofits & causes they already know and trust?
That seems to be the case, more often than not. And it's amazing the effect a yacht can have on donations?
So if your church, charity, or nonprofit needs help, innovative proprietary fundraising or financial support, please let us know how we may be of service.