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Charities fear for economically vulnerable under new Republican tax bill

'The projected declines in giving will devastate our ability to provide food assistance'

Ann Carrns
Saturday 16 December 2017 13:31 GMT
President Trump has praised the new proposals
President Trump has praised the new proposals (Getty Images)

Even before congressional Republicans finalised their tax bill, charities were worried.

The final legislation roughly doubles the standard tax deduction, to $12,000 (£9,000) for individuals and $24,000 (£18,000) for couples. A higher standard deduction means fewer taxpayers will itemise their deductions on their tax returns, reducing the incentive to give to charities. Currently, only taxpayers who itemise — meaning, they detail gifts to charity and other spending on their returns — may deduct contributions.

“The non-profit sector is alarmed,” said Michael Thatcher, chief executive of Charity Navigator, a charity rating website. The change in the standard deduction is “the biggest cause of concern,” he said.

Estimates of the impact from an increase in the standard deduction vary. According to the Tax Policy Center, more than 46 million filers would be expected to itemise in 2018 under current law, but that number would drop to under 20 million.

“For charities who serve families in need, the projected declines in giving will devastate our ability to provide food assistance,” said Diana Aviv, chief executive of Feeding America, a network of food banks.

For many charities, 2017 is shaping up to be a good one for fundraising, as the economy hums along and the stock market booms. The United Way of Greater St. Louis, for instance, which serves Missouri and Illinois, expects top donors to contribute 6 per cent more than what they gave in 2016, said Orvin Kimbrough, the group’s president and chief executive.

But the future is cloudy under the new tax regime. The group estimates a potential drop in taxpayer giving to charities of $169 million annually in Missouri, and $431 million in Illinois, under the new tax law. “That’s a lot of money,” Kimbrough said. “This is about people’s lives.”

One short-term bright spot: Donors, uncertain about whether they can deduct a contribution next year, may be more generous this year, giving not-for-profit groups a bump in 2017 fundraising.

Some fundraisers are asking donors to consider doing just that.

The Greater Milwaukee Foundation, which makes grants to support community and civic groups, sent an email to donors, explicitly noting the effect of the tax overhaul. “If you are a taxpayer who itemises,” the email said in part, “it probably makes sense to accelerate some charitable contributions into 2017 to get a larger income tax deduction this year.”

The New York Times

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