Donations to non-profits dropped by over 3% despite, you know, that "strong economy"

[ck4829]

One of my favorite songs is “Something’s Coming” from West Side Story: “Could it be, yes it could. Something’s coming, something good.” For the nonprofit sector, something is coming, but it definitely won’t all be good. And, note that the fellow, “Tony,” singing ends up dead.

Perhaps a better anthem would be Camila Cabello’s “Something’s Gotta Give:”“Something’s gotta give, something’s gotta break. But all I do is give and all you do is take.”

The impact of the Tax Cuts and Jobs Act (TCJA) enacted at the end of 2017 is just beginning to be felt. The TCJA increased the standard deduction so that many taxpayers no longer need to itemize their deductions. An estimated 21 million taxpayers no longer receive a tax benefit for their charitable contributions.

While donors give for many reasons, contributions by individuals dropped in 2018 by 3.4 percent in inflation-adjusted dollars after increasing by 3 percent in 2017, despite the continuing strong economy in both years. The TCJA was almost certainly a factor, even though the charitable deduction itself, thanks to intense lobbying by the sector, avoided the TCJA axe.

https://www.thenonprofittimes.com/legal/the-winds-of-change/

Put up another asterisk for that "strong economy".

[rampartc]

1. lower taxes mean lower tax deductions.

[ck4829]

2. Heh, so much for that trickle down or supply side

[rampartc]

3. their faith based economics has never worked

among other reasons that people are not all (and not always) motivated by greed.

[moondust]

4. Inequality

leading to more people with less disposable income and thus less able to donate? Perhaps the 1% with the grotesque excess are more likely to be greedy psychopaths who got to where they are by screwing people, not helping them.

[ck4829]

5. Sounds about right to me

[former9thward]

6. The text of the OP argues against the headline.

Many people give if they can get a tax deduction which will partially subsidize it. If that is not there they are not going to give no matter what the economy is or no matter what their personal situation is.

[Recursion]

7. Higher standard deductions mean fewer people itemize

Fewer people itemizing means less incentive to donate. It's a shame.

[spinbaby]

8. I had a tax person tell me

That, depending on your other deductions, you probably need to donate between $10,000 and $15,000 to itemize and start getting some kind of tax break on your charitable contribution. In other words, it only benefits the wealthy.

[csziggy]

9. My tax guy said if donating for deductions

Double the deduction but only give every other year. That could get me above the limit so I can get the tax benefits.

I don't donate for tax purposes. I donate to help the organizations. So I said screw it and set up monthly donations to the groups I want to support.

Going forward, I may consider lump sum donations at the end of the year for tax purposes - and might do that only every other year to get the deductions. But I don't like that method at all. It's going to take a few years before my financial situation settles down - my husband and I are waiting for three estates to be settled - and I will revisit the situation then.

[uponit7771]

11. +1

[Cosmocat]

10. They eliminated deductions for chstutab

They eliminated deductions for charitable giving if you take the standard deduction. The bulk of funding to non profits comes from people who have the ability to itemize their deductions.

[MichMan]

12. Slashing the standard deduction would be helpful then, right ?

Is that what I am hearing?

[Recursion]

13. For the purpose of increasing charitable donations, yes

Though as a standalone action it decreases the progressivity of the American tax system hugely.

[Tink41]

14. Sad

Every year I cleaned house, any good usable items, clothing etc would get packed up and given to St Vincents. However little was added to my deductions was incentive enough to donate instead of trashing. I abhor garage sales, so not an option. After losing about 3000 in deductions last year, union dues, work related expenses, I trashed my items i usually donate. It's not worth packing up and making 30 min drive to do it. I'm sure the logic is purely psychological, as I doubt the deduction was any great amount.

[MichMan]

15. Also sad, that people will donate to charity as long as they get some monetary value from it

I have not itemized for many years, yet always make donations to local and breed specific animal rescue groups as well as my college

[karynnj]

17. Anyone contributing dollars does not get monetary value from it

Last edited Sun Jan 5, 2020, 03:14 PM - Edit history (1)

When they itemized, the amount given would be subtracted from income (constrained by various limits). What it essentially did was that the government would "pay" (actually lose revenue) for part of the donation. If someone's top MARGINAL bracket was 28% (and the marginal bracket threshold was less than taxable income minus the donation), then the government actually paid 28% where you paid 72%. (You would pay .28 times the donation) less in taxes.

[MichMan]

18. Reducing ones taxes with deductions is most certainly a monetary value to the filer

Charitable deductions, SALT, Mortgage Interest, Excessive medical debts, Student loan interest etc

[karynnj]

19. My point - if monetary value was the only issue, you would have more money after taxes by NOT giving

In the example given:

Let's say the donation was $100.

If you give it, get the deduction, and then pay taxes.
You get $100 removed from taxable income. This means you pay $28 less than had there been no deduction.

One way to look at it is that you gave the charity $100 and the government reimbursed you $28 - meaning the cost of the donation for you was $72.

The difference between the other things listed - SALT taxes, mortgage interest, medical debts and student loan interest - is that donations are voluntary. Under both tax policies, you are giving some of your assets to benefit organizations you believe in. The difference is that more people now bear the entire cost for the donation made.

[Tink41]

20. Wrong, sorry.

I specifically took time out of my day to organize, pack up, and make a 30 min drive to drop off unwanted items. That would have either A: (If i enjoyed haggling)Be resold at a garage sale or B: Disposed of into the trash, recycled etc. OR instead of disposing of usable items, clothing I'd donate them. I never spoke of currency. I've never had extra currency to give. Volunteer time? Yes. Not only have the tax laws taken away the incentive to donate, they've also taken away incentive to own a home. What is the point if my standard deduction is the same as someone living on the street.

[karynnj]

16. timing to get the tax benefit available in 2018 that for many would not exist in 2019

Note that the dollars were UP 3 percent in 2017 --- this might mean that the 2019 number was relatively close to the 2016 number.

I know that a significant number of people opted to pay 2018 synagogue dues in December 2017 -- rather than summer 2018 which would have been the normal process. (Enough that the Treasurer had to explain this in both annual reports at our synagogue.)

Not to mention, there was long term fear that many people no longer getting a tax deduction due to itemized deductions would give less. (Consider that someone with enough income that they pay 28% MARGINAL tax on some income would in 2017 actually be paying just 72% of the donation if the amount would all have been taxed at 28%)