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The Journal Gazette

Saturday, December 30, 2017 1:00 am

Tax law adds new challenge on giving

Individual donors less likely to benefit

SHERRY SLATER | The Journal Gazette

Fundraising is expected to become a bit more challenging for local and national nonprofits next year.

Because the federal standard tax deduction will double after new tax laws take effect, fewer people will benefit from itemizing deductions on their 2018 tax year returns, which are due in April 2019.

Some people traditionally have used charitable contributions as a way to reduce their adjusted gross income, the amount they pay taxes on.

Matt Smith doesn't believe tax deductions are what motivate donors to the University of Saint Francis, however. The university's vice president of institutional advancement said there's a deeper connection.

“Research shows most people give toward nonprofits because they support the (organization's) mission,” Smith said.

So, he said, emphasizing how students and the community benefit from donations will be even more critical for nonprofits than ever.

“It becomes incumbent on each nonprofit and educational institution to craft a message about that impact,” he added.

In Indiana, 32,993 nonprofits employ 230,200 workers and generate $45.7 billion in annual revenue, according to Independent Sector, a national organization for nonprofits, foundations and corporations “to advance the common good.”

Riley Children's Foundation, which supports Riley Hospital for Children at Indiana University Health, is among the organizations reaching out to potential donors as the year ends, hoping to spur last-minute contributions.

Independent Sector, the U.S. Conference of Catholic Bishops and the United Way all opposed the tax changes that President Donald Trump signed into law Dec. 22.

Steve Taylor, vice president for public policy at United Way Worldwide, told the Washington Post that the organization is concerned that its primary donors, middle-class workers, will cut back on giving.

Officials at United Way of Allen County couldn't be reached Friday.

“We don't have any choice but to look to those higher-end donors more. We have to,” Taylor said. “But it's not really what we have to do, and it's not really healthy for the charitable sector in America.”

Last year, individual donors gave almost $282 billion to nonprofits – or 72 percent of the $390 billion total, according to Giving USA, an annual report on philanthropy published by Giving USA Foundation. The 2017 report divides nonprofits into nine major sub-sectors, which include religious institutions, education providers, human services provides and foundations.

Despite widespread concern, the sweeping tax overhaul gives Smith, of the University of Saint Francis, reason for optimism.

Taxpayers who find themselves with more discretionary income because they're paying less to the government “might give a little bit more” to nonprofits, he said. “So it's a mixed bag.”