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2020 Tax Requirements: Regulation, Taxes and Donors Affected?

Tax Requirements

It is crucial that those who are running nonprofits are fully aware of the current risks that their organization faces. Many regulations, tax requirements, and donor relationships have been evolving, all of which greatly impact nonprofit organizations. It is likely that some of your donors will no longer itemize deductions, and therefore may not be as inclined to donate — unless you remind them that there are good reasons besides tax benefits.

Tax Changes are Here: Is Your Nonprofit Organization Ready?

Are you properly prepared to protect your nonprofit organization in this time of specific tax requirements and change? Venable, a law firm with a large nonprofit practice, shared a very insightful publication. On December 31, 2019, Cindy Lewin and Larry Norton published “The Winds of Change: Regulation, taxes and donors all in the danger zone” in The NonProfit Times. An excerpt:

“The impact of the Tax Cuts and Jobs Act (TCJA) enacted at the end of 2017 is just beginning to be felt. The TCJA increased the standard deduction so that many taxpayers no longer need to itemize their deductions. An estimated 21 million taxpayers no longer receive a tax benefit for their charitable contributions.”

Many donors who once looked forward to this tax benefit may now reconsider any future contributions. With the changes in tax requirements, it is critical to continue to remind your donors of the many great reasons to support your organization, apart from a tax benefit. This can be done by frequent and effective communication about the organization’s mission and the work that has been accomplished. For the tax-exempt organizations that must file Form 990 with the IRS, keep in mind that this form can also be used to highlight the organization’s good work. Form 990 provides the IRS with information regarding the nonprofit’s activities, accomplishments, financial statistics, and governance, which can be used by organizations such as Charity Navigator and GuideStar to highlight an organization’s credentials and attract contributions from potential donors.

Most donors will do thorough research when considering what organizations they want to support, using Charity Navigator and GuideStar to obtain insight, so it is more important than ever in this time of regulatory change that both your current and potential donors are kept aware of your vital work. Another tactic for charitable organizations is showing how contributors have helped them to reach goals in the past, and how their donations will continue to help the organization flourish and benefit its community.

Protection Where it Counts

VIS has a variety of resources to help you manage your foreseeable risks. If your nonprofit organization is faced with significant and unexpected loss of revenues, a “rainy day fund” can make all the difference in your ability to sustain operations. Our recent blog post, “When It Rains…Is Your Nonprofit Waterproof?”, offers guidance on planning for difficult financial times.

If you have enjoyed this content and find it useful, we invite you to become a VIS member. For $25 a year, members have 24/7 access to over 70 resources on insurance, injury prevention, vehicle safety, event safety, human resources, volunteer management and other topics to help the volunteer-based organization manage its foreseeable risks. New content is added each month. Join now. Questions? Email us at volunteers@visvolunteers.com  or call us at 800.222.8920.

About VIS

Volunteers Insurance Service Association, Inc. (VIS) was established in 1972 for the purpose of providing insurance and risk management services for volunteer-based organizations. In addition to still providing these insurance services today on a nationwide scale, we have expanded to provide noninsurance resources for members to manage their risks and improve their operations. By transferring the volunteer risk exposure to our program, we can help you protect your organization. Contact us today at (800) 222-8920 for more information on our programs and services. Join now!