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
Under current plans to increase taxes on the rich, to make sure they pay their fair share, the average nonprofit can expect to lose over 40% of revenue, with the hardest hit losing over 70%.
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Churches, charities, schools and universities; the entire non profit sector and many political endeavors are increasingly dependent upon 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.
It's likely to only get worse for non-profits and their donors in the future.
That's why YES Yacht Executive Solutions offers its resources and solutions to help non profits and those that provide financial support.
How much more do you think your supporters would give, if their effective tax rates were less than 5% - rather than more than 50%?
YES currently has gifts valued from $50,000 to $5,000,000 available to qualifying nonprofits.
And that's just to start the first year.
Churches and ministries automatically qualify for gifts valued up to $50,000. Larger gifts and other nonprofits are considered on a case by case basis.
Many Have Not, Because They Ask Not
As for political non profits; campaigns, 501(c)(4)s, PACS & Super PACS, etc. many may simply have not because they ask not.
Ask most CPA's, attorneys, or industry professionals about tax deductible political donations you'll likely get the same response about profitable boat ownership, "It can't be done".
But is that even the right question?
Perhaps they're not getting the right answer because few ask the right people the right question.
It's unfortunate but not surprising in these divisive times that politics is so key to the future of many nonprofits. Any prudent discussion about the future viability of non profits must consider political threats.
A recent study by the National Institute Of Health (NIH) found that political conservatives are significantly more charitable than liberals.
Democrats simply don't value the non profit and private sectors as much.
Their polices are that most social services provided by non profits and supported by tax deductible donations are best provided by increasing taxes and allowing the government to provide the services.
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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, Congress, the bureaucracy and the "Administrative State."
The last time Democrats controlled such power they passed the Affordable Care Act aka 'Obamacare' and the IRS under Lois Lerner was targeting certain people, businesses, donors, and non-profits.
It doesn't appear as if the situation has changed much.
No telling what may come from this current cancel culture, the consequences of such a concentration of political power - and the willingness to arbitrarily enforce it through authoritarian administrative action, or the addition of 80,000 new IRS employees will have on society, the economy, and certainly churches and non-profits.
All Nonprofits & Donors Need A Safe Harbor -
That includes 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.
The primary targets of the Biden tax plan are those that make almost 1/3 of all charitable donations.
Therefore, even most of the largest donors will soon have less discretionary income to donate to nonprofits.
Where Do You Rank?
Scientific research in behavioral economics as to the donors' decision making process and psychological relationships between tax rates and charitable donations shows that the "tax elasticity" for the average nonprofit to be about negative 4; with the range for all nonprofits from near zero to more than negative 6.
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.
That if your current advisors knew, surely they'd have told you already- wouldn't they?