Nonprofits worry tax changes will curb donations in 2018
Nonprofits across the suburbs are bracing for the effects of the federal tax overhaul, hoping people will continue to make charitable contributions in 2018 even though fewer taxpayers are expected to itemize deductions next year.
"We think that our donors give because of other reasons besides just looking to receive a tax write-off," said Cesilie Price, CEO of Boys and Girls Club of Lake County. "We are very much hoping that continues, and that mindset grows with people that are caring and concerned about the citizens of Lake County. And of course, across the country."
Starting in 2018, the standard deduction for most individual taxpayers will increase $12,000 for single filers and $24,000 for joint filers, which could dramatically cut the number of people who itemize their deductions.
Without itemizing, people who contribute to charities for the write-offs will no longer have that incentive.
People should consider making extra charitable contributions as 2017 winds down, to take advantage of the deductions still in place for this tax cycle, according to reporting by both Forbes and The Washington Post. That includes not only donations of money, but also food, clothes and other items, for which people must get receipts.
The YWCA in Elgin received an unexpected gift of $10,000 recently from a couple who wanted to maximize their charitable giving before the end of 2017, agency CEO Julia McClendon said.
"The couple told me they don't know what's going to happen next year," she said. Their gift "was amazing to us. I almost fainted opening that."
Most provisions in the tax bill, including key changes on itemized deductions for individuals, go into effect Jan. 1. YWCA USA has alerted local chapters that charitable contributions might be affected negatively starting in 2018, McClendon said.
The tax bill increases the charitable contribution deduction limit to 60 percent of one's adjusted gross income, up from the current 50 percent, but that isn't likely to affect many people, experts say.
The effect of the tax changes on nonprofits hinges on how much they rely on individual giving, as opposed to corporate giving.
About 60 percent of Boys and Girls Club of Lake County's $1.3 million annual budget comes from individual giving, Price said. "Obviously our organization would be hurt if that (tax write-offs) is the only reason why people give," she said.
YWCA Elgin has an annual budget of about $1.2 million and gets $80,000 to $100,000 in charitable contributions, McClendon said. "We don't get as much as most organizations," she said.
Still, each monetary gift makes a difference, she said.
"We are nervous about all the change," she said. "But it's like all things with nonprofits - you will die if you don't figure it out. So we'll figure it out."