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The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

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Thursday, December 14, 2017

How the Tax Bills Might Affect Your Donation

December is half-way done, and we’re fully into the holiday season! Your giving is always
guided by the causes you care about, whether it be animal shelters, food banks, or one
of the million organizations working to change the world. When considering to give to
an organization you’re passionate about, you’re probably thinking about the tax deduction
you’ll be able to get with your donation. But that might be changing soon.

With the new tax proposals in both the House and the Senate, there are major shifts in the
way that you might be able to get a tax deduction for your donation.

You’ve probably heard that you’ll be eligible to receive a higher standard deduction of $12,000.
According to Indiana University’s Lilly Family School of Philanthropy, this doubling of a
standard deduction means that only 5% of taxpayers would take itemized deductions. In order
to get a tax deduction for your donation to a 501(c)(3) organization, you have to itemize.
This means that some people might bunch their donations together — donating every other
year in order to get over the standard deduction threshold. This will affect charities who count
on your annual support to keep their doors open and programs running — if they’re unsure
of when they’re going to get a contribution from donors they’ve relied upon for years, it could
change their entire operations.

The Lilly School, in a report they released in May, estimated that this new standardized
deduction would reduce charitable giving by $13 BILLION EACH YEAR, meaning that
28 million Americans might not itemize their tax returns. The Tax Policy Center says it
expects charitable giving to drop even more — with a reduction between $16 and 24
BILLION annually.

There is also a push to completely eliminate the estate tax, which means that large estates
which are donated to charity may not happen in the future. GivingUSA estimated that
charitable bequests were over $30 billion just last year, and this potential elimination could
cause a loss of $4 BILLION to charity. Many organizations receive contributions from estates
after someone has passed, and this shift in eliminating the tax means that charities won’t
be able to count on this form of support in the future.

If you donate stocks to charities, your deduction could also change! Currently, you can choose
between the First-In, First-Out method and the Specific Identification Method. The Senate
proposal states that the option for Specific Identification would be eliminated, meaning
that “stock investors would be required to divest their oldest shares first regardless of
whether those shares come with the lowest cost basis.”

In the past century, America has become known as the most generous country in the world.
Your individual donation makes up the largest source of support for nonprofits in the US —
three of every four dollars raised comes from your contributions.

If you’re looking to make sure that your charitable deduction count, consider contacting
your representatives to ensure that your tax return next year will include deductions for
your donations!

So what does this mean for you? Well, if you plan to make donations, do it soon. Whether
it’s the monetary gift you give every month or the box of clothes that’s been in your closet
that you’ve been meaning to donate — the next two weeks is your time to make sure
your donations count.

As a 501 (c) (3) organization itself, Charity Navigator depends on public support to help donors make informed choices. Please consider investing in the future of Charity Navigator by making a donation today.  Donate now >>


pipettte59 said...

When my parents passed we got killed by the estate tax. It stole 2/3 of their savings. Probate took nearly a year and in the down market of 2008...what can I say...ouch. I have prepared my own documents. Upon my demise it all goes to charity. I have no family left. I plan on putting it to good use. There are good people out there who can use it well.

Unknown said...


Unknown said...

1. Will contributions still be deducted?

2. Will qualified charitable distributions be exempted?


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