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Posted by Heather Sherwin

Will changes to the tax law affect charitable giving?

February 2, 2018

Foundation News

Everyone can be a philanthropist with their gifts of treasure large and small. We look forward to seeing what 2018 will bring. 

Experts and pundits are devoting quite a bit of attention to this question.  Some even claim that charities stand to see a $13 billion decline in giving overall due to the changes in the law.  

They claim that because the standard deduction has increased so many donors will have less cause to itemize deductions thereby reducing the incentive to make charitable donations.

Others are more optimistic and point toward year over year findings from various research studies that conclude most people will give the same amount even if they received no income tax deduction for charitable giving. The U.S. Trust Study of High Net Worth Philanthropy, conducted by U.S. Trust and the Indiana University Lilly Family School of Philanthropy every two years since 2005 reports that “people’s main motivations for giving were to make a difference (73.5%) and for personal satisfaction (73.1%). Receiving a tax benefit came way down in 11th place in the list of possible reasons, cited by just 34.4% of respondents.”

Our view at CCCF sides with the optimists and we offer some strategies for donors and nonprofits to consider this year.

For donors:

Donate stock. The capital gains tax remains unchanged so gifts of appreciated stock are an advantageous way to make a charitable donation.  This type of gift usually enables donors to give more money to the charity than they would if they sold the stocks on their own, paid taxes on the gains, and then donated the cash to the organization.

Consider a starting a Donor Advised Fund. CCCF’s minimum to establish a Donor Advised Fund is $10,000.  Donors can make a larger than normal contribution to their Fund in one year that exceeds the standard-deduction limit ($12,000 for single people and $24, 000 for couples, under the new rules). Then gift from the fund to charities that they support over several years.  The tax deduction will apply in the year they give to the fund.

For nonprofits:

Stay Mission focused. In a recent article published in the Chronicle of Philanthropy, Kathryn Miree, a nationally recognized fundraising expert states, "The most important thing for [nonprofits] is to build strong relationships with their donors and to focus on the impact that they have on lives and how their mission impacts those they serve. If they focus on those two, they are going to continue to grow their giving — because donors give to impact."

Consider adding IRA distributions to your fundraising message. People over 70 1/2 are required to take a minimum distribution from their retirement accounts and pay income tax on the distribution. If they donate directly from their accounts to a charity (up to $100,000) it’s tax-free — and their gifts still count toward their minimum distributions.

Overall, our community is made stronger by the dedicated people who lead and staff our nonprofits and the overwhelming generosity of the donors and volunteers who support them.  Everyone can be a philanthropist with their gifts of treasure large and small. We look forward to seeing what 2018 will bring. 

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