Local charities are anticipating a potential dip in charitable donations resulting from the tax overhaul adopted in December.
Under the Tax Cuts and Jobs Act signed Dec. 22 by President Donald Trump, the standard deduction for single filers went from $6,350 to $12,000. Joint filers also saw an increase from $12,700 to $24,000.
“With us being a nonprofit, we are so dependent upon grants and donations and fundraising. That’s really what keeps us in business and able to support the kids that we serve, so it’s certainly a concern,” said Janet Walden, executive director of the Hall-Dawson Court-Appointed Special Advocates.
CASA volunteers represent the best interests of children in foster care as they present information to Juvenile Court judges making custody decisions.
“I hope that the tax code is not really the factor, that the factor is really more sharing that common value of ensuring that abused and neglected kids have a safe, loving permanent home where they can thrive,” Walden said.
Tax filers can itemize deductions such as charitable contributions as well as some medical, business and mortgage interest expenses. If a filer chooses not to itemize, a person can take the “standard deduction” from their potential taxable income.
The Tax Policy Center estimated in January that 21 million fewer tax returns will include the itemized charitable deduction in 2018 compared to the 2017 tax returns due by April 15. According to the analysis, about 15.9 million 2018 returns are expected to include the deduction, which would be 9.1 percent of all filers. That compares to 21 percent before the overhaul.
As a result, the nonprofit philanthropy network Council on Foundations estimated the tax law will “result in a decrease of $16 billion-$24 billion in charitable giving every year.”
Since the law change, Rushton business services partner Perry Barnett said many of the questions he has fielded were from small business owners concerned about business-related deductions.
While many of the group’s clients itemize, he said he has not heard much discussion about the charitable deductions.
Georgia CASA Executive Director Duaine Hathaway echoed Walden’s comments, saying there is potential for a dip in individual donations. He, too, is hopeful for minimal change from donors who see the value of the work being done.
“I think we’ll have to wait and see. We do anticipate that it could have some effect,” Hathaway said.
Foundation grants represent a larger percentage of total revenues, Hathaway said.
“I think that the individual donor piece of the revenue is probably a smaller percentage of the pie. Of course, it’s still something that we would really be stretched to live without,” he said.
The 127 CASA volunteers with active cases last year donated more than 20,000 hours and drove more than 100,000 miles, Walden said.
Gateway Domestic Violence Center Executive Director Jessica Butler said it is too early to know how the change might affect local donations, if at all.
“We know a lot of people donate to us because the issue of domestic violence is important to them or because this agency is near and dear to their heart. But we know that that tax incentive was probably a factor for some of those donors,” Butler said.
Local donations to the domestic violence center represent 25 percent of the group’s income, Butler estimated.
“It’s a very critical piece of our budget. It would be a big concern if we find at the end of the year that those dropping because of this tax change, but we just don’t know enough yet to know what the impact will be,” she said.