Recently, The Economist, a print and online newspaper that covers a wide range of topics, published an article entitled Recent Tax Reforms in America will Hurt Charities. The article cites recent updates that have unfolded due to the tax plan. Many of the insights that can be found in the article reflect observations we made in our recent guide, “Public Policy Changes and How They Affect Your Nonprofit”. Our guide details how the tax plan was slated change the landscape of the charitable sector in 2018. According to The Economist’s article, many of the observations we made about tax plan have already started to take effect in nonprofit community.
The main insight from the article has to do with charitable donations. It stated:
“The most significant threat to charities comes from changes to income tax. American taxpayers can choose either to “itemise” specific expenses, such as charitable gifts or mortgage payments, or take a “standard deduction”. In an effort both to simplify the tax code and to lower overall tax rates, the bipartisan Congressional reform almost doubled the standard deduction to $12,000 for individuals and $24,000 for married couples. This will make filing taxes a lot easier for many. It also means that far fewer Americans will have a financial incentive to donate money.
Charities, understandably, are worried. The Tax Policy Centre, a think tank, estimates that the share of households claiming charitable deductions will fall from 21% to 9%. The decline will be especially steep for middle- and upper-middle-income households. Overall charitable donations are expected to fall by 4-6.5%, or between $12 billion and $20 billion. Research from the Lilly Family School of Philanthropy at Indiana University has reached similar conclusions.”
Please visit The Economist to read the rest of the article.
So, what does that mean for your nonprofit organization? As we said in our guide, it’s important to encourage your supporters to donate to your nonprofit and other ones in your community. It’s more important than ever for organizations to deliver mission, and they need donations to help them do it.
To hear our take on the tax reform plan and how your nonprofit can navigate any uncertainty it may face during 2018, download Public Policy Changes and How They Affect Your Nonprofit today.