Tales From The Trails:

How the Tax Bill May Impact Charitable Giving

Like many nonprofit organizations, the Forest Park Conservancy relies on donations and charitable giving to be able to do the important work needed to help protect and preserve our beloved Forest Park.

Yet the tax bill just passed by Congress may have significant implications for nonprofit organizations, and those of us who make tax-deductible charitable gifts. As reported by the NY Times, “the final legislation roughly doubles the standard tax deduction, to $12,000 for individuals and $24,000 for couples.

A higher standard deduction means fewer taxpayers will itemize their deductions on their tax returns, reducing the incentive to give to charities. Currently, only taxpayers who itemize — meaning, they detail gifts to charity and other spending on their returns — may deduct contributions.”

States like Oregon that have relatively high income and property tax but no sales tax are also impacted because of the new law will limit deductions from state and local income taxes and property tax to $10,000. Previously, there were no such limits.

For donors, this means you may want to consider giving more before Dec. 31, 2017 in case deduction opportunities are limited in 2018. By making a larger gift now, you may be able to take advantage of a more generous tax deduction, while doing significant good for nonprofit organizations that may suffer from the new tax deduction limitations next year.

If you do plan to give more in 2017 to offset the possibility of giving less next year, please let the nonprofits you support of your intention, so they can plan accordingly. Nonprofits will be grateful for the additional support but if you won’t be maintaining that in the future, it will help groups project future income and programs better. 

One other option is you could consider setting up a donor advised fund which allows donors to make a charitable contribution now, receive the tax benefit in 2017, and then recommend grants from the donor advised fund over time. There are fees associated with setting up donor advised funds. You can take advantage of this option through brokerages or nonprofits. 

It is always wise to consult your financial adviser or accountant to learn more about how the new tax laws will impact you. Here are a few resources:

AARP Analysis of the tax bill

Tax bill’s potential impact on charitable giving

Learn more about how to support groups you care about and still get a tax benefit

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