The Tax Reform Package and Your Nonprofit
As many of you are aware, the U.S. House of Representatives has introduced a comprehensive tax reform package. The Oklahoma Center for Nonprofits along with other state associations, the National Council of Nonprofits, and several national organizations have a number of concerns about proposals within that tax reform package that could have negative effects on the charitable sector.
As we have previously communicated to you, our chief concern with the Tax Cuts and Jobs Act (H.R. 1) will be the doubling of the standard deduction. While this will be beneficial to simplifying personal taxes for millions of Americans, it has the potential to also negatively impact charitable giving. While the Act rightfully continues to include a charitable giving incentive through a deduction, by doubling the standard deduction, fewer Americans will itemize on their returns. In fact, Lilly School of Philanthropy at Indiana University estimates that the number of Americans who itemize has the potential to reduce from 30 percent of tax filers to just five percent of filers. Additionally, the Lilly School of Philanthropy estimates the impact to be a loss to charity of $13 to $22 billion annually.
Another concern with the tax reform package as presented will be the elimination of the estate tax. Currently, the tax incentivizes donors to give more to charity through their estates via planned giving mechanisms. This elimination would disincentivize that giving substantially.
Finally, the charitable sector continues to oppose any legislation to weaken or repeal the Johnson Amendment that prohibits nonprofits and churches from endorsing political candidates. OKCNP will continue to voice its opposition, even as the tax reform package includes language that would allow churches to endorse candidates.
There is a bright spot in potential legislation that would ease the negative impact on charitable giving. HR3988 or the Universal Charitable Giving Act (Walker, R-NC) could help all individuals and couples who do not itemize consider more charitable giving. Tim Delaney, President and CEO of the National Council of Nonprofits noted that it is “a bill that would extend to all taxpayers a tax deduction for donations to the work of charitable nonprofits. Representative Walker’s bill is a clear effort to provide a solution to our communities for a problem created by the tax reform framework released in late September by Republican leaders in Congress and the Administration.”
We are hopeful that this language could be inserted into the tax reform package. If run as a separate bill, we will notify you through an action alert to support the measure.
OKCNP will keep you informed about state and federal policy issues that affect our charitable sector. Please also download a copy of our 2018 Policy Platform here.
We also invite you to join us for our upcoming Advocacy forum events in Oklahoma City and Tulsa on Nov. 30 and Dec. 1. And beginning Jan. 4, we will host advocacy roundtable events each month for nonprofits to come and join us in discussions about current issues the sector faces, issues within subsectors and federal policy. Those are tentatively set for the first Thursday each month at 4:00 p.m. in Oklahoma City. We will set up conference bridges for those calling from outside the city, and we plan to hold similar roundtable discussions each month in Tulsa should there be demand.