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  • Advocacy Update - The Effects of the New Tax Reform Laws in 2018

    HOW DID TAX REFORM INFLUENCE CHARITABLE GIVING? STREAMLINED REPORT – BY THE NUMBERS

    By: Stephanie Wilson, July, 10,2019

    How did the new Tax Reform change philanthropic giving during its first year: 2018?  The reform eliminated or sharply reduced the benefits of charitable giving for many would-be donors.  And while it was not the huge hit that we might have expected, it could identify the beginning of a trend.   

    First, let’s look at the law.  Deduction for donations was unchanged in the Tax Cuts and Jobs Act; however, individuals now must itemize in order to claim any deduction. The new law only allows itemized deductions that exceed $12,000, up from the prior year of $6,350 standard deduction of single people. For couples, this is doubled.  So, fewer people itemized, making charitable contributions less attractive for tax purposes. 

    There are some important factors to keep in mind during this first year that may – or may not – have had an impact on giving.  Taxpayers were uncertain as to how the new reform would affect them, which likely caused hesitant giving.   The year ended with our volatile stock market taking a nose dive just when many donors are considering their end of year gift, which is nearly always for tax deduction purposes. 

    THE NUMBERS IN 2018

    AMERICANS GAVE $427.71 BILLION to charity

    FOUNDATION & CORPORATION GIVING INCREASED but INDIVIDUAL GIVING DECREASED

    NUMBER OF ITEMIZED TAX RETURNS FELL FROM 46 MILLION TO 19 MILLION

    GIVING INCREASED BY LESS THAN 1% - not enough to cover inflation costs


    TOTAL NUMBER OF DONORS DECLINED:

    3% INCREASE IN GIFTS OVER $1,000
    4% DECREASE IN GIFTS RANGING FROM $250 - $999
    4% DECREASE IN NUMBER OF GIFTS UNDER $250