New GOP tax bill shrinks incentives for charitable giving

Duckie & Shelby arrived at the Sac SPCA with medical problems, but with care they are expected to soon be ready for adoption. The animal welfare organization depends on donations and volunteers to keep going.

The recently passed GOP tax bill could have implications for charitable giving, but Sacramento nonprofits are placing their faith in the generosity of their supporters.

On any given day of the year, the average charitable donation is about $114, but on Dec. 31, that average almost doubles to $223, according to the Network for Good. In fact, 10 percent of all charitable giving for the year happens on Dec. 29, 30 and 31 -- presumably for tax purposes.

Under current laws, about a third of Californians itemize their deductions to reduce their tax bill. However, the GOP tax bill raises the standard deduction, effectively eliminating the incentive to give for millions of people.

Many in the nonprofit sector have faith in their supporters, and because they know their causes are worthy, they are optimistic that changes to the tax code won’t chill the impulse to give.

Kenn Altine, CEO of the Sacramento SPCA, said he believes people give because it’s the right thing to do, and because they care about their communities.

“When you’re an organization that people have a real affinity for the work that you do, I don’t think tax implications are the reason for giving,” he said.

In addition to simply sheltering animals while they await adoption, the SPCA has a mission to provide care for old or sick animals so they have a better chance at adoption.

 “I don’t see the bulk of our donors seeing us as a tax deduction, they see us as a solution to a problem they care deeply about,” he said. “That hasn’t changed.”

Julie Bornhoeft of WEAVE, a Sacramento nonprofit that serves domestic abuse and sexual assault survivors, likewise said she is confident her organization’s supporters will continue to come through for the population they serve, for the same reasons Altine gave.

 “I believe survivors of domestic and sexual violence deserve access to safety – and I know that’s what our community believes,” she said. “Philanthropy was a fundamental part of this country long before there was an incentive for deductions. People give because they are generous and caring.”

However, some in the nonprofit sector worry that removing the incentive is going to whittle away at charitable giving.

“People are always going to give, but the charitable deduction motivates them to give more,” said Rich Cohen, spokesman for the National Council of Nonprofits.

The Council on Foundations estimates the new tax code could cause a dip in charitable giving up to $24 billion.

No one is certain exactly how the tax bill will affect giving in California, least of all tax accountants.

For some, the current political climate might cause them to increase their giving regardless of the benefit to themselves.

Meaghan Likes of Likes Accounting Company in Davis, had an encouraging talk with a client recently about how much he wanted to give –he felt “a personal responsibility to contribute more this year,” she said.

Likes advised him of how much he needed to give to maximize his tax return, “and then he ended up giving more,” she said.

If the new laws discourage charitable giving, nonprofits might not feel the hit next year, she said.

Although changes may apply to next year’s revenues, the effects likely won’t be seen until the 2019 tax season – and Likes said while she wishes it were more, only about five percent of her clients plan proactively – the rest don’t even think about their taxes until it’s time to file.

“I feel like that bodes well for charities,” at least for 2018, Likes said.

In any event, now is a good time to give, for those so disposed.

“Contribute as much as you can this year,” Likes said.

© 2018 KXTV-TV


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