Add nonprofits organizations to list of those confused about the Republican tax reform package.
According to Giving USA, the package could lead to a drop in charitable giving — to the tune of $13 million to $20 million nationwide.
According to Business Oregon, the new tax law increased the standard deduction to $24,000, removing financial incentives for some low- and middle-income households to donate money to nonprofits. Taxpayers still get a credit for gifts, but with the higher deduction, it is estimated that fewer than 5 percent will itemize, said officials with the Tax Policy Center. Only those who itemize can claim the standard deduction.
Jim White, director of the Nonprofit Association of Oregon (NAO) advised people to stay calm and be clear about messages sent to potential donors.
“We’re honestly kind of stumped about how this will work,” said Max Williams, president and CEO of the Oregon Community Foundation, who was quoted in Business Oregon. “We’re trying not to crystal-ball it too much.”
If fewer people itemize, wealthy donors will get more credit for their gifts than lower-income donors, and perhaps be more inclined to give. Nonprofits that rely on a large number of donors who give up to $5,000 a year, or a couple hundred bucks here and there, could take the biggest hit.
And that could spell a lot of money for many of hundreds of smaller nonprofits in Curry County.
The vast majority of gifts are typically received at the end of the year because donors like to shorten the time gap between giving and filing their tax return. In that respect, it could be months before an impact is seen.
Most nonprofits have a reserve to help them survive downturns; studying the tax reform package should enable them to make adjustments throughout the year. Some have already lowered their growth expectations and are crafting flat budgets.
The Oregon Cultural Trust, which has provided grants to nonprofits in Curry County, is gearing up for a drop in donations. It usually receives 49 percent of its revenue from donations, which includes $46 million given by individuals.
If that decreases, the organization plans to reduce its staff and educational programs, Executive Director Brian Rogers said.
The increase in the estate tax exemption could also prompt wealthy taxpayers to cut back on donations to nonprofit organizations. Wealthy donors sometimes increase gifts to nonprofits after the sale of property to counterbalance the hit they just took with an estate tax.
Without the need to reduce their liability, they might be inclined to donate less.
In that case, larger nonprofits such as colleges and medical researchers would take the hit.
And while politicians say corporate giving to foundations could fill the gap, others don’t think that’s realistic, as such donations have been flat in the recent years.
But donors in small communities who often give their funds to local enterprises, typically do so because they are emotionally vested in the nonprofit’s work, said Jonathan Jellen of Oregon Wild, a statewide environmental group.
That’s particularly true in Oregon, said NAO’s White, noting that people here, and at every income level, give at higher rates than those in other states.
“We’re very lucky,” he said. “Losing a tax credit won’t sever their emotional bond to their favorite causes. It’s an Oregon value to be caring and concerned.”
Reach Jane Stebbins at firstname.lastname@example.org .