The new tax law’s impact on charitable giving remains to be seen, but Omaha nonprofits expect the holidays will reveal whether the changes will discourage philanthropists from stepping up during the most popular time of the year to donate.
“Until we see the numbers, we won’t know for sure,” says Matt Darling, vice president of donor services for the Omaha Community Foundation, which connects donors with causes they want to support. “Nothing can be proven yet.”
The new law took effect Jan. 1, with the most significant change affecting the standard tax deduction, which is a fixed amount that benefits everyone who pays federal taxes. The 2018 single filer’s standard deduction is $12,000—nearly double the previous deduction of $6,350. For taxpayers who are married and filing jointly, the 2018 standard deduction is $24,000—up from $12,700.
Darling says most people donate as the holidays approach in October, November, and December, with the largest gifts going to charities between Thanksgiving and New Year’s Eve. Some people donate because they view the holidays as an emotional time of year and want to help those less fortunate; others see the season as a natural deadline or incentive for tax planning purposes before Jan. 1.
But the fear among nonprofit organizations all over the country—organizations reliant on charitable contributions to fund their causes, pay their employees, and have a positive impact on their communities—is that under the new law, taxpayers who don’t itemize their tax returns will stop donating as much money as they had in the past.
There are options for filers who want to give and receive a positive tax benefit, Darling says, if they use a strategy called “bunching.”
Under bunching, taxpayers would give the same amount they would over a two-year period in only one year. Bunching in one year allows them to itemize dedications where they otherwise could not.
“I’m hearing a lot of conversations about it, just tweaking the individual amounts,” Darling says.
The Omaha Community Foundation has helped facilitate donor contributions of more than $906 million since it was created in 1982. Recipients have included more than 3,000 charitable organizations in Omaha and southwest Iowa, including nonprofits, initiatives, and funds.
The foundation is made up of more than 1,200 donors. The city is nationally ranked fourth in per capita giving, according to its website.
Despite the worries over the new tax law, Darling is confident that Omahans will donate as they always have. That’s how people are here, he says.
“Nationally, I think there will be an effect,” Darling says. “But not every community is like ours. I have no reason to believe that Omaha will see a contraction of charitable giving.”
He continues: “It’s our hope and the charitable community’s hope that we are going to continue down this track. We are a giving town.”
For more information on the new tax law, visit irs.gov.
This article was printed in the September/October 2018 edition of Omaha Magazine. To receive the magazine, click here to subscribe.