Tax Reform is Here
Tax Reform is Here
What nonprofits should be doing NOW in its wake
With the most sweeping changes to tax law since 1986, the latest tax reforms could have significant repercussions on the charitable sector for decades to come. The Lilly School of Philanthropy estimates that charitable giving could be negatively impacted by $13 to $20 billion dollars per year because of changes being implemented. However, nonprofits can and should be communicating with donors right now to mitigate these potential impacts.
Tax reform doubles the standard deduction, and fewer Americans will itemize. It is estimated that only five percent of filers will now itemize their taxes. This reduces the incentive to give at the end of the year.
Tax reform also phases out and eliminates the estate tax. Fewer wealthy donors will consider larger estate and planned gifts to nonprofits, as there will be less incentive to do so.
There still is no universal charitable deduction. That was not included in this package.
WHAT NONPROFITS CAN DO NOW
You should be letting your donors know that for the maximum impact to their own tax situation, they should make contributions this year, before Dec. 31. They’ll need to act fast. By donating this year – especially if considering large gifts or contributing to multiple organizations – they will have a great tax deduction should they stop itemizing in the future. Financial professionals are also encourage donors to create more significant donor advised funds this year. We’ve included a few resources below to help you understand what donors need to know.
You should also be COMMUNICATING with your donors and building relationships that go BEYOND END-OF-YEAR LETTERS. Let them know how important your nonprofit is to the community and the impact your services have on your consumers. More importantly COMMUNICATE WITH YOUR BOARD and start planning for the future and your organization’s sustainability.
Analyze your real situation. With additions to the deficit, Congress will certainly be making significant cuts to domestic spending. How would Medicaid, Medicare and other federal cuts impact your programs? Now is the time to begin those conversations if you have not yet started.
The Oklahoma Center for Nonprofits will continue to keep nonprofits apprised of what you need to know with these sweeping federal changes.