Commentary: What will 2018 mean to charities with tax law changes?
By Gene Kemmeter
How are charities dealing with the Tax Cuts and Jobs Act that takes effect in 2018?
For the 2017 tax year, the standard itemized deduction was $6,350 for individuals and $12,700 for married couples. When filing 2018 tax returns, the itemized deductions will nearly double, going to $12,000 for individuals and $24,000 for married couples. A congressional report estimates that 18 million households will itemize deductions for this year, down from 46.5 million for last year.
However, during discussions about the impact of the change in deductions, some tax exports predicted little impact for charitable donations, saying citizens would continue to give to causes they felt were worthy to support.
They also pointed out that the majority of donations come from low-income or middle-class taxpayers who don’t itemize their deductions, but are willing to share their income with others less fortunate.
Many studies have found that the rich, who may give millions, are less generous as a class than those with low-income status. Research indicates that people living in wealthy neighborhoods desire to see their bank accounts increase instead of parting with money.
The wealthy tend to donate to elite universities, museums and art organizations – which are truly worthy causes, but not ones which provide bread for people’s tables. The poor make their donations to religious organizations and social service charities that help their neighbors. Also, the big donors are also more likely to donate to causes that bring them public recognition, such as bestowing their name on a building.
Billionaires Warren Buffett and Bill and Melinda Gates are among some of the 1 percent wealthiest Americans who are urging the wealthy to donate more to charity each year instead of stockpiling it for themselves. Whether that effort becomes fruitful to charities won’t be evident until the end of the year.
Many people are already witnessing the fears of legitimate charitable organizations. Mass mailings seem to be rising well above those in previous years, with some residents receiving requests almost weekly from some charities and others from organizations previously weeded from the donors’ list.
Charity anxiety is definitely evident. Who will provide the funds needed for worthy causes if legitimate charities can’t raise the money? Will the situation spur more unscrupulous individuals to form “charities” to further their own monetary fortunes? Will donors have to research more charities to ensure their money goes to the “right place”?