The New Tax Laws: The Sky is Not Falling on America’s Nonprofits

The New Tax Laws: The Sky is Not Falling on America’s Nonprofits
By: Jim Lyons, Senior Partner Pride Philanthropy

There has been much conversation and consternation about the potential impact on nonprofits and charitable giving as a result of the tax law changes that were passed in late 2017. While the new law will impact different people in different ways, we are not anticipating any significant impact on charitable giving as a result of the changes in tax laws. In reality, there have been several changes that allow for expanded deductions for America’s most generous donors.
The one area that has been the greatest concern in the charitable world is the impact of raising the standard deduction to $24,000 for those who do not itemize their deductions. The concern here is for those who do not itemize, there’s no longer as great an incentive to make a gift as that gift would no longer be deductible. Historically 80% of our gift gifts come from those who do itemize. Another statistic to consider is that 75% of all money given away in the country comes from 4% of our donors. This means we still need to focus our efforts on the high net worth individuals who can make a significant gift to a nonprofit organization.

What is most important in the new tax law are those areas that were left unchanged. There have been no changes to the text deductibility of gift annuities and certain types of trusts and no changes in the treatment gifts of appreciated assets. This will be a considerable factor for the Baby Boomer generation as they consider gifts late in life. There have been no changes to the IRA Rollover Provision which allows for individuals 70 1/2 and older to make a gift up to $100,000 directly from their IRAs.

There’s additionally been some concern about raising the exemption on estate taxes from $5.49 million for individuals to $11.2 million. The fact is that those levels of estates represent less than 1/10 of 1% of all the estates that are probated in the country. These high net worth individuals typically have sophisticated estate plans which include provisions for multiple charitable organizations and the tax considerations are less important than leaving a legacy to a community or an organization.

There has been a myriad of articles written the past few months about the tax law changes, and this article is not intended to be tax advice. You need to consult your own CPA and or/tax attorney for advice regarding your specific circumstances. The main takeaway for nonprofit
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charitable organizations are to not be overly concerned about the changes and become less than positive about the future of giving. There may be special situations where the tax deductibility is impacted, but we are not anticipating any significant overall impact to giving. Studies have shown tax deductibility is way down the list of considerations when someone makes a gift and is far outweighed by 1) the person who asks, 2) others involved with the charity, 3) the charity’s reputation as being a quality organization and a good steward of their resources, 4) a specific interest in healthcare, education, the arts, etc., and finally followed by tax considerations, which primarily affect structure and timing of payments.

When we look historically at tax law changes, we have seen several since 1969 and each time there is great concern about what it will do to giving. We have not seen any measurable impact from any of those changes. The biggest driver of giving is the economy and the stock market. Giving tracks at about 2% of GDP and has for decades. The market also moves in the trend with the S&P 500, although not anywhere near to the level of volatility of the stock market. We have only seen giving go down in two years in the last 60 years and that was in ’08 and ’09 when the stock market saw historical drops. People
give because they think they can make an impact on an organization and/or a community. My advice to donors is to keep giving because you do make a difference and my advice to nonprofits is keep asking and positively presenting your mission and how you change lives.

For more information about the Georgia Healthy Family Alliance Capital Campaign –

Pride philanthropy is a consultant for the GHFA Capital Campaign.