The Grinch Who Demotivated Charitable Deductions
The just-signed Tax Cuts and Jobs Act, like all income tax laws, will reward some behaviors and penalize others. Unfortunately for nonprofits, the new rules are going to discourage charitable donations.
At a time when discretionary government services are diminishing, and as deeper cuts are contemplated, the role of nonprofits in filling the holes in the social safety net is becoming more essential. Charities have been stepping up to provide emergency relief and long-term aid for those who lost everything in California’s wildfires, and in the floods and hurricanes that decimated the Gulf Coast and Puerto Rico. They’ve responded to the mass shootings in Las Vegas and Texas. And day in, day out, they work to meet the needs of abused women, hungry children, the homeless, the disabled.
…The problem is that while the Tax Cuts and Jobs Act preserves the deductibility of charitable contributions, it restructures the system so that millions will lose incentives to give. Most people donate from their hearts to causes they care about, regardless of taxes. It is undeniable, however, that the reward for giving will go down and the cost of giving will go up…