What Does the New Tax Reform Mean for Charity?

According to Jimmy LaRose, who writes for Inside Charity, what Tax Reform Means for Charity is more Money, Money, Money. He writes: The recently passed “Tax Cuts & Jobs Act” bill (which I have read in its entirety) is the greatest thing to happen to nonprofits in three decades. Especially for organizations who rely on MONEY to underwrite their programs. Consider the old adage, “there are things in life that are more important than money”, is about as silly as saying “there are things in life that are more important than AIR.” Money, like air, in and of itself is not very impressive, nor does it give life meaning. However, life has very little meaning…IF YOU CAN’T BREATHE. Money is oxygen. Without it, charities asphyxiate, atrophy and fail. That’s why the recently passed “Tax Cuts and Jobs Act” is important for charities who know that capacity-building is the key to financial sustainability. Let me share you with you three reasons why more Money, Money, Money is about to be infused into the charitable sector.

First, for “Non-Itemizer’s”, the Standard Deduction Doubles…Giving You More Cash

This one is easy. Small gifts are given from the heart not for tax purposes. These givers have always paid dollar for dollar when making a charitable donation. The “Tax Cut & Jobs Acts“ doubles the size of their standard deduction from $6,350 to a $12,000 for single taxpayers. Likewise, couples filing jointly jump from $12,700 to $24,000! Why is this significant? Because it gives small to mid-size donors more disposable income. They don’t give for tax reasons. These donors will have more money to give to your important mission. How Wonderful…How Marvelous.

Second, for “Itemizer’s”, Charitable Deduction Increase from 50% to 60%…Gives You More Money To Give

This one is even easier. 60% is more than 50%. The “Tax Cuts and Jobs Act” not only keeps the charitable deduction intact but INCREASES the limit on cash contributions from 50% to 60% of adjusted gross income when given to charity. There’s a false argument being bandied about that because the standard deduction has doubled less people will itemize and as a result give less charitable dollars. This is patently false, in that, the vast majority of itemizers are upper-middle-class individuals (not super wealthy) and aren’t trying to reach a charitable deduction tax-advantage. They too give from the heart. These donors are the ones who look back each year wondering how much they gave each year and report it accordingly. For donors in the higher-income brackets their CPAs will make sure that they take advantage of the charitable deduction which is now even higher.

Third, Corporate Taxes are Reduced from 38% all the way down to 21%. THANK YOU CONGRESS. Historic…Unbelievable!

The United States has the fourth highest corporate tax rate IN THE WORLD, levying a 38.91 percent tax on corporate earnings. The only jurisdictions with higher rates are the United Arab Emirates, Comoros, and Puerto Rico. The “Tax Cuts & Jobs Act” reduces corporate tax rate from 38% to 21% sparking a boom in business that ultimately lifts their own profits AND PAYCHECKS to employees WHO BOTH CARE & GIVE. Here’s what’s about to happen:

· Corporations will hire more “Non-Itemizers” whose increased disposable income can be shared with nonprofits.

· Corporations will hire more “Itemizers” who will use their increased tax deduction (50% to 60%) to fund causes.

· Corporations will have more “Marketing Dollars” to invest in charity. (100% write-off)

· Corporations will have more “Charitable Dollars” to invest in charity. (50% write-off)

It’s already happening. Within hours of the bill passing Boeing declared that they would spend $300 million on “employee-related and charitable investments” because of the tax plan. Wells Fargo announced that they would increase donations to nonprofits and community organizations in excess of $400 million in 2018.

In closing, people donate because they are passionate about a cause. NOT FOR TAX PURPOSES. In a recent survey performed by National Development Institute major donors were asked “why” they give. The answer “charitable deduction” came up so few times that the term “tax purposes” (as a reason for giving) didn’t even make it into their final report. In conclusion, be of good cheer. I’m fond of saying “tax purposes” may be a reason some people give but it’s never a reason that they give to you. So as we enter 2018 be sure that our Mission to “Bridge the Gap” is here to stay. Your continued donations will ensure that hard- working students, working their way through Villanova, will stay in school and graduate! Thank you for showing your Blue & White spirit!