Tax Benefits?

Do people support the synagogue financially because it is advantageous in terms of taxes?

I doubt it is the first thing people think about when considering becoming a part of a synagogue community. Even when the first invoice comes for a new synagogue fiscal year, tax advantages are seldom the first thing that pops in our minds.

Maybe for people with 5 and 6 figure capital or endowment commitments to the synagogue, charitable contributions and tax planning is something to ponder. But not for most of us.

Before the recent tax law changes – taking effect in 2018 – 30% of tax filers itemized their tax returns. While we must wait for the IRS to share such information for 2018 returns, studies are predicting that only 4% to 10% of all filers will itemize. 2018 standard deductions will nearly double for everyone – $12,000 for a single filer, $24,000 for those filing jointly. It is the maximum deduction of $10,000 for mortgage interest and/or real estate taxes that will really impact the decrease in those able to itemize.

The statement “Your donation is tax deductible to the fullest extent allowed by law” should still be on dues invoices and fundraising appeals.  There will still be congregants who will be able to itemize and who will benefit tax-wise by their synagogue support.

How people feel about the synagogue and its vision remain the more dominant influences related to giving.

There are still a couple of ways for contributions to be advantageous in terms of taxes. Paying one’s synagogue dues through gifts of appreciated stock, including shares of mutual funds, is still a pretty good deal. Persons doing this do not have to pay capital gains tax on the sale of the stock as they would if they were to just sell the stock outright.

To make such payments work, the synagogue has to establish a brokerage account to accept such payments electronically. Anytime invoices are sent to congregants, you might also include a statement that simply states “You can pay off your dues/pledges with appreciated stocks, bonds or mutual funds. For more information, email or call the synagogue’s executive director” (or whoever is the Lead on this).

For congregants 70 ½ and older, utilizing your IRA to pay your synagogue dues or other charitable commitments to the synagogue is the best tax advantage. Payments are made directly from the congregant’s IRA. And you can make up to $100,000 in charitable contributions from your IRA annually. Such gifts do not have to be reported as income.

Congregants with some financial savvy will know about utilizing shares of stock or mutual funds to make payments, and of course utilizing their IRAs as vehicles for charitable payments. The synagogue should highlight such payment options as well. Such payment information should always be on or included with invoices. Separate emails during December encouraging support/payments would be helpful as well.

A congregant’s “donative intent” will always be the primary reason for charitable giving. So appeal to congregants’ hearts and heads. Any tax advantage is just an additional benefit.

High Holy Day Appeal:Facebook

I admit it. I am an avid user of Facebook. Perhaps 2-3 times a day. I catch up on my children and their posts – although I sometimes think that they don’t share all of their posts with me. Friends and colleagues, too – some of them share too much. And various groups that I am a part of, including our synagogue.

And this sponsored ad popped up in my Newsfeed.  I haven’t had an opportunity to work with the leadership of this synagogue.  I am sure that Congregation Beth Shalom, an Orthodox synagogue located in Providence, RI purchased a Facebook ad so that the ad about the synagogue’s Kol Nidre Appeal would appear in all of the newsfeeds of the 425 members of its Facebook community (one of them is a friend of mine).

Years ago, when the internet was in its infancy and direct mail was the primary means for grass roots fundraising, direct mail consultants would always stress a few specific goals: for the recipient to open the envelope, for them to read the letter, to write a check, and put it in the mail. And you were excited to get a 3-5% response rate to a prospect (never gave before) mailing. And a 10% response rate for prior donors.

Email philanthropy follows a similar game plan. A catchy subject line so that the people open up the email. My view has always been that you have the size of a screen – perhaps 3 paragraphs for a laptop, and 1 for a smartphone – worth of prose to tell your story and make your case for people to give. A couple of links to a donation page, and a “radio button” that reads “Donate” also has to be a part of what is before the eyeballs of the readers.

I like this Facebook approach. I hope the leadership of Congregation Beth Shalom also sent a regular letter along with 1-2 emails to its congregants about its Kol Nidre Appeal. The more communication/marketing channels you are utilizing as part of the approach for the High Holy Day Appeal, the better.

In a few paragraphs, the message is clear: the Kol Nidre Appeal is important to the synagogue and they need to raise $30,000. And gifts of all sizes – $18 to $1800 – are important.  And 2 DONATE “radio buttons”, along with other check-off options – pay by check, pledge, multiple payments – all that is readable without a lot of scrolling effort.

And think of the reach of this ad through Facebook. If each person in the synagogue’s Facebook community has just 200 FB friends, this ad is appearing on the Facebook feeds of 85,000 different people.

I am sure that there are congregants who are not on Facebook. I know at my synagogue, there are less than 10% of the congregants who don’t use email, primarily octogenarians.  Over time, these numbers will lessen.  Twitter and Instagram are social media platforms that continue to grow and should be considered as additional synagogue channels.

Technological advances move pretty quickly, so in 5 to 10 years, there may be other social media platforms down the road that we will be using that have not yet been invented.

“Curb Your Enthusiasm”

The big envelope comes from the synagogue with the sticker on the front “High Holy Day Information inside”. It sits on Larry David’s desk for a couple of weeks and the day has come when he needs to decide what to do.

Larry has been debating for a few days in his own mind whether he wants to go to High Holy Day Services this year, and even continue at the synagogue. For the last few years, he has only gone 3 days a year. His children and grandchildren live in New York and won’t be coming home. When he does go, he sits there for a couple of hours anticipating the rabbi’s sermon and remembers it as often being a letdown. He decides he could use those days to work on a few writing projects and throws the big white envelope in the waste basket.

Two days before Rosh Hashanah, his friend Jeff comes over to visit. Jeff is all excited. He and his wife just had breakfast at the diner and bumped into the rabbi, who gave them a sneak peak of this year’s High Holy Day Worship – as well as his Rosh Hashanah sermon. “You have to come, Larry. It is going to be great. A band, a choir and the rabbi is going to preach about what we can do to make the world a better place.”

Well if Jeff is going, “I am going, too”, Larry thinks. So you can bet that the writing of his next sitcom is going to have to be delayed for a few hours while Larry calls the rabbi, and whoever else he has to call, to get those precious tickets.

I have written about that maybe we should stop using the word tickets, and call it “Spiritual Passes”. That way, we would no longer be speaking about tickets in the same vain as we do tickets for the Red Sox-Yankees series next month, or to “Evan Hansen” and “Hamilton”.

High Holy Day Tickets are a benefit of membership and belonging to a sacred community. Synagogues also use High Holy Day Tickets for security purposes. Having a ticket means that you belong and the ushers (and sadly, police officers) can let you through.

Can High Holy Day worship ever be open to the public? Security issues can be overcome – which of course costs more money. And you don’t want to alienate congregants who provide both ongoing financial support as well as volunteer their time. Space might also be an issue. Some synagogues have dealt with this through community-wide worship in more public spaces. Or making all services open to the public, except those that always have high attendance – First Day of Rosh Hashanah, Kol Nidre and the morning worship on Yom Kippur.

Maybe Larry David, after his various telephone calls, secures those tickets, that he can pick up at “Will-Call” – the synagogue’s office. If he can’t snag the tickets, maybe he just shows up. He shares his saga with the usher at the door who recognizes him and lets him in.

I wonder what will happen at the Community Seder….

Events: Fun or Funds?

My cousin Rob is an Optometrist. As a “side job”, he is an amazing woodworker and makes an assortment of wooden bowls of different sizes, usually from trees that have come down from snow and rain storms. Every year, Rob participates in a few Craft Fairs, one held at a synagogue as its annual big fundraising event.

It was either last March, or the March before, there was a huge rainstorm the day of the synagogue’s Craft Fair. Rob and many of the other vendors – who all had spent $200 upfront to reserve a table – made the trek in the rain to set up their wares. But attendance was significantly lower than in prior years. This of course impacted sales as well as the synagogue’s take, as the synagogue also received a commission on all sales. And of course they also sold refreshments.

So an event that generated $40,000 or so in the 3 prior years, and where the projected net income in the synagogue budget was $45,000, operated at a $20,000 loss. That might not seem like a whole lot of money to some. But with the end of the synagogue’s fiscal year approaching on May 31st, the $20K had to come from somewhere.

I have heard this story a lot. Weather certainly does impact the success of fundraising events. I cringe when synagogues in the Northeast tell me their big fundraising event is in February.

Success from year to year is unpredictable for other reasons besides weather. Having honorees at events with the hope that they will generate donations raises similar issues of unpredictability – for synagogues and big organizations, too. One year, the synagogue’s Person of the Year is Joe. He owns a company that makes corrugated boxes. He is on the board of the local hospital and the Chamber of Commerce. He provides you with a great list of his customers, his lawyer, accountant, and friends.

The next year, the persons of the year are Mimi and Dan. Mimi is a retired public school teacher and Dan retired 5 years ago as a school principal. Both are great people who have done so much for the synagogue in terms of being on the board and committees. Most of their friends are from the synagogue. The list they provide is of people with far less giving capacity than Joe’s list.

Everyone will have a great time. But the budgeted projection is for $70,000, based on the successful effort honoring Joe last year. The $45,000 income that is realized this year is great, but it leaves the synagogue’s board with end of fiscal year budgeting and fundraising challenges it wasn’t counting on.

The primary goal for synagogue events should be for fun and to build community. Costs should always be covered, and the expectations of fundraising should be modest at best.

Being short of budgeted income expectations from events means that synagogue bean counters will have to adjust line items, or approach the synagogue’s leadership – board members and other supporters – for additional contributions to make the budget. You can do this once in a while. People may become a bit concerned about the leadership’s budgeting prowess.

A donor centered approach to fundraising, asking people with capacity for meaningful gifts as part of a High Holy Day or end of year appeal will reap better results and will be more predictable in terms of budget projections.

 

P.S. Check out this Blog on this same topic.

 

What Are We Looking For?

A few years ago, we moved. “Downsized and modernized” was my mantra. We lived on a small block with a lot of activities – annual Labor Day Block party, December holiday gatherings. There was even a communal snow blower. Picture a Norman Rockwell painting of a New England neighborhood.

But in New Jersey.

One of the downsides of our current condo development with 78 units in an enclave right off of Main Street is the lack of community feel. People are certainly nice, but there is no natural opportunity other than the annual Condo Association meeting to bring people together.

Our synagogue, Temple Ner Tamid, remains a vital anchor in our quest for community. The move brought us a little further away distance wise – 2 ½ miles more and a couple of steep hills. But the synagogue remains a big part of our lives, and of course our support system. To us, it seems logical that feeling a part of a community is part and parcel of synagogue membership. As many of you know, there have been many many blogs and articles written and workshops offered about how often this doesn’t happen.

When it comes right down to it, most people throughout their lives are looking for community. Parents want their young children to be a part of a playgroup – and they want to form a bond with the other parents. In college, we gravitate to people with similar interests with whom we could solve the problems of the world, play basketball, listen to music and hang out. As adults we want to get to know our neighbors or even the people on our commuter train.

When my parents, in retirement, moved to Florida, they became a part of a self-directed group of retirees with weekly breakfasts, book groups, interesting speakers and social gatherings.

Joining a synagogue follows this theme.

Millennials are finding community through Facebook and other forms of social media. I posit that they can solely rely on their laptops and smartphones for community. At some point, a desire for human contact will kick in. There will be the rare individual who would rather be a total recluse and choose most often to keep to him or herself. At some point, one needs to physically be with others.

When it comes to building community in synagogues today, we use a lot of buzzwords:  “engagement”, “relational Judaism”, “outreach”, “membership”, and now “Small Groups”. Perhaps the Chavurah movement in the 1970s was in incubator for this.  Small Groups bring people together to pray, to eat, to do social justice projects, and really to be a part of the synagogue in meaningful ways. Many churches today are also using Small Groups in similar ways. The challenge to engage people so that they feel a part of a community is similar, no matter the size of the synagogue or church.

The biggest challenge for synagogues is starting up such a program. Involvement of clergy to initially bring groups together and lead initial programs and provide ongoing ideas to help nurture Small Groups is critical to success.

Words and Tone Matter

My doctor’s office is filled with signs as to the “Do’s and Don’ts”. And it often seems more are about the “Don’ts”.

“If you need a referral, we need at least One week”.

“You need to provide your co-pay at the time of Check-In”.

“As of July 1, 2015 (3 years ago! – really) we no longer accept ABC Insurance”.

“Don’t come for bloodwork after 10:00 AM”.

I have been a patient with this practice for many years. The medical care is pretty good. The doctor calls with the test results, good and not so good. But in all of this time, I don’t think anyone from the office staff, or my doctor, has ever commented “it was great to see you; or thank you for being a part of our practice for more than 20 years”. Even a sign among the others that said “We care for you and care about you – Thank you for being a part of our practice” would be a nice touch.

Words matter. And so does tone. This is especially true for synagogue communities.

Many synagogues begin their new fiscal year in either June or July. I have a hunch that many of us recently received a statement, as the financial cycle begins, that has language similar to this:

“Dear Temple Member,

Attached is your monthly statement. If you have an outstanding balance due to the temple, a reminder of the dues payment terms follows:

2016-17 or prior balances are all now past due and are due in full.

2017-18 dues: 1/3rd by Sept 1st, 2/3rd by Nov 1st and 100% by February 1st. Payment in full is of course welcome.

If you are receiving this invoice, it is presumed you are continuing your membership with the temple. If this is not the case, please contact us at office@temple.org.”

An opening paragraph that simply thanks congregants for being a part of the synagogue community would certainly convey a welcoming and appreciative spirit. It is the first invoice of the year.

I think an invoice from Amazon is even more of a “warm and fuzzy”.

For synagogue communities, it can’t just be about collections, or about money.  The ”Thank You” shouldn’t be hidden in the last line of the last paragraph. Congregants should be recognized for being a part of a sacred community – as well as for their generous financial support.

During the coming weeks, there will be many opportunities to communicate with congregants. The weekly email, the monthly newsletter, as well as various snail mail and email packages about the High Holy Days. I know it is at times appropriate to remind congregants of the importance of financial obligations. But it is also certainly appropriate – and very beneficial – to thank them for being a part of a synagogue community as well as for their money.

A synagogue invoice should focus on more than just the transactional aspect of a congregant paying money. It is the relationship that makes the synagogue special.

Highlight this in the words you use, in invoices and in all communications.

High Holy Days: It’s an Opportunity

Many of us have the annual debate: whether the High Holy Days are early or late this year. If Rosh Hashanah falls soon after Labor Day – as it does this year on September 9th – pundits comment that the High Holy Days are early this year. When Rosh Hashanah starts after September 15th, many of us speak of the High Holy Days being late.

The reality is, of course, unless we are in a Leap Year of the Hebrew Calendar, when there is a second month of Adar, the High Holy Days are always right on time.

So now – 60 days to the High Holy Days – is the time to begin to create your High Holy Day Campaign plan. You will have several opportunities to communicate with congregants preparing for the High Holidays, whether it be about financial statements, recipes, and worship schedules. You will have a captive audience for worship, with people being in a synagogue frame of mind. And studies I have read – and more importantly, my fundraiser’s gut – tell us that people are most likely to make contributions to the synagogue at this time of year.

The important thing here is to do something.

Here is a “fundraising toolkit” that you might follow. Maybe the end of summer for your congregants doesn’t happen until Labor Day. And reaching out to congregants with capacity as well as a history of support of the High Holy Day Appeal is a challenge before that.

So one option is to compress what you do between Labor Day and the first day of Sukkot. You still need to target persons with capacity and if possible, speak with them in person. Congregants with any High Holy Day giving history should be asked for an increased gift over what they contributed previously.

While technology can make the various ways we communicate easier, personalization for both a mail merge for a snail mail letter or email always helps. Add a personal handwritten note on a letter, even if it is simply “thank you for all that you do for our synagogue community”. And send out the letter, with a response form and return envelope, so it arrives in congregants’ homes just after Labor Day.

Have emails prepared and ready to be sent to arrive when people arrive home on Rosh Hashanah afternoon, and the morning after Yom Kippur. Don’t be afraid to incorporate short video messages from the clergy and other synagogue leaders. Most importantly, be sure to have a link to your donation webpage, and even a “radio button” with that same link interspersed throughout the concise copy.

Like anything in life, the more planning you do ahead of time, the more effective your campaign efforts will be. If you procrastinate, Labor Day will be here before you know it, and your High Holy Day campaign will happen by the seat of your pants.

If you need help to brainstorm ideas and to develop a plan, feel free to reach out.

Ask Rabbi, Ask!!!

The best synagogue campaigns are when the rabbi is actively involved in all aspects.

Helping to write the case for giving and vision statement, Prospect identification, creating strategies for engagement, and soliciting. We often think of rabbis as the “Chief Spiritual Officer”. But the reality today is this: not only is the rabbi the CSO, he/she should be the Chief Engagement Officer, the Chief Program Officer, and the Chief Development Officer – even when there is a development professional on the synagogue’s staff team.

I have often used the analogy that the role of the rabbi in fundraising is much like that of a college president. In a fundraising campaign of significance for capital or endowment needs, the focus will most often be on major gifts – those persons with five and six figure capacity, at least in the campaign’s beginning stage. The adage that 90% of the funds will come from 10% of the people still holds true, even for synagogues. Especially for campaigns with goals of 7 or 8 figures.

A recent Blog I read about church fundraising through bequests challenges this thinking. Firstly, a recent study of Southern Baptist pastors showed that 86% of respondents stated that their church provides no information to congregants about estate planning. If we were to do a similar study of congregational rabbis -for all denominations – it would not surprise me if results were similar.

But what really struck me about this blog was the thesis that pastors need to be careful to not use their influential position for fundraising purposes with their congregants.

Rabbis (and pastors) do often know confidential information about congregants. They visit with congregants at times of their lives when they are vulnerable because of the challenges of life.  The author of this blog shares his opinion that a pastor should not take advantage of a congregant’s vulnerability when asking for significant support.

Rabbis and development professionals would all agree that asking for a significant gift to the synagogue when a congregant’s spouse has just passed away is not the smartest thing to do. Or even the most ethical. So you wait.

And it is always important to ask.  Because if you don’t ask, you don’t get. Or what you get is based on luck rather than an outcome of your own action.

Many organizations have been the recipients of bequests from estates of people who had little or no involvement in the organization. It is probably a rarer thing for this to happen at a synagogue. I told this story in a Blog a few months ago. A very generous guy to many different organizations passes away and leaves $1 million to several Jewish and non-Jewish organizations. For the synagogue he leaves $500,000. The rabbi, after receiving the notification from the gentleman’s estate attorney and a listing of beneficiaries and amounts asks the attorney why the synagogue received less than the other organizations. The lawyer responded, “because the other organizations asked”.

I still believe the rabbi is the congregation’s chief development officer. But like everything in life, common sense is often the best guide to figuring out the right time and right way to approach a congregant with a significant ask.

 

Synagogues Paying Taxes?

It may happen for some.

When I see the word “PILOT”, the immediate thought that comes to mind is the person who flies a plane. When I have my synagogue hat on, I also think of a new program or initiative for the synagogue that is being offered for the first time.

For people involved in municipal governments, “PILOT” takes on a whole new meaning, specifically related to money: Payment In Lieu of Taxes.

Many leaders of municipalities with government land (state or federal national parks), private and state universities, hospitals and even houses of worship are thinking about PILOT often.

Universities and Hospitals/medical centers have large footprints and often have large endowments as well. But while they have not-for-profit status, critics have suggested they operate like businesses. And in many cases, such institutions are providing no financial support for local services – like police, fire, schools, and road maintenance.

Is this right?

There are a number of universities and medical centers throughout the United States that do make such voluntary payments.

In a previous blog about PILOT, I opined that the separation of church and state would be the major concern when this issue was raised for houses of worship in a particular community. Recently, I have been exchanging emails with the treasurer at a Massachusetts synagogue. He received a letter from the local tax authority which I believe asks for the synagogue, and all houses of worship in this municipality, to make a voluntary PILOT.

There seems to be a lot of voluntary PILOT happening in cities and towns throughout Massachusetts. After all, in Boston, Cambridge and in towns throughout the Commonwealth there are many colleges and universities. And think of the medical complexes throughout Greater Boston.

And now, there is precedence during the current century of houses of worship making a voluntary PILOT to local municipalities.

In 2013, the First Parish Bedford, a Unitarian Church in the Boston suburb of Bedford, MA made a $1,000 PILOT.  Not much money of course, but a symbolic gesture nonetheless. Houses of worship benefit greatly from local services. I have the vision of the police car that is often idling in the parking lot of my synagogue as an example of such services.

But what about synagogues? I did some Internet research and came across a 2015 document from the Town of Northampton, MA. Smith College is located in Northampton and owns land and property that has a value of more than $420 million. In 2015, Smith College paid the City of Northampton more than $90,000 as part of the PILOT program, which was tied to the college purchasing buildings from the City of Northampton.

Similarly, Congregation B’nai Israel in Northampton, purchased a developable parcel of land from the City in 2002. The synagogue in 2015 paid the City of Northampton more than $7000 as part of the sales agreement so as not to totally remove the property from the tax rolls.

What does this mean for your synagogue? Who knows. It does make sense that municipal governments will be turning to property owners whose property has been taken off of the tax roles for some type of financial support.

And I am not sure the argument about separation of Church and State will carry the day.

Tax Reform: Moving for a Job – It’s Not Good News

Early in my career, we moved twice due to the requirements of a job. When we were newly married, we moved from Boston to Brooklyn. We had a small apartment and didn’t have a lot of stuff. I connected with the “Art Movers” who moved furniture on the trip back from moving Art for museums between Boston and New York. The New York UJA Federation covered the moving expenses which cost about $500.

Two years later, a job took us to Montclair, NJ. Our movers were the 7 Santini Brothers, who follow the laws governing Interstate Commerce.  My best recollection is that the bill to move was around $3000 – with a 10% discount. If you move within a state, moving companies charge a combination of the number of boxes and furniture as well as by the hour for 3-4 guys who are moving your stuff. Between states, prices are governed by weight and distance.

And if you moved for a job and your employer didn’t reimburse you for moving expenses, you would be able to deduct the full cost of moving on your tax return.

So what’s the big deal about moving expenses?

I have been wondering about the impact of the “Tax Cuts and Job Act of 2017”. An earlier blog took a look at tax reform and charitable giving. Of course we really won’t know anything for sure until the end of the calendar year and we have statistics and analysis.

But what we do know is that the tax laws governing moving expenses have now changed.

Check this out: Your synagogue had hired a new rabbi. The rabbi will be moving from Boston where she is working as an Associate Rabbi to Northern New Jersey where she will become the rabbi of a 400-family synagogue. Her contract states the synagogue will cover moving expenses for which the estimated amount is $6,000.

According to an article in Church Law and Tax Report, the synagogue’s payment of the $6,000 for moving expenses must now be considered as taxable income for the rabbi.

And the costs associated with moving – home inspection, legal fees – that would have been deductible as moving expenses that were job related in 2017 are no longer deductible in 2018.

For profit companies, especially the Fortune 500, are supposedly reaping the gains of lower tax rates. So covering such added costs for employee moves are not a big deal. Not the case for not-for-profit organizations and houses of worship.

As always, it is important to consult your own tax professionals regarding the new treatment of moving expenses. But unlike the question as to how the new tax law will impact financial support of the synagogue, such changes in the treatment of moving expenses will directly impact newly hired clergy and other synagogue hires.

For synagogues hiring new employees for whom you are covering the costs of moving expenses – you may wish to add an extra 20%.

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