Charities hold breath as lawmakers work on tax reform
SMU economist Cullum Clark talks about the potential impact of tax reform.
Charities are holding their breath as lawmakers hammer out details of a massive overhaul to the tax code
Some organizations are fearful the changes could equal a drop in charitable giving.
“The last couple of weeks of the year our donations go way up,” said Jonathan Rich, Salvation Army. “In fact the last quarter of each calendar year we see more donations, about 50 percent of our donations come in the last quarter alone.”
The most visible fundraiser is the Salvation Army’s Red Kettle Campaign, but they are also reliant on major gifts.
“When someone like you or me decides to give a thousand dollars to a charity, that’s a major gift and we get to write it off on our taxes if we itemize and that’s the stuff that’s going to go away,” Rich said.
Congress is crafting a tax reform bill that will double the standard deduction for single and married people. That is likely to mean fewer people will itemize tax returns and fewer year-end charitable donations.
“You would probably see about a $5-10 billion decline in giving each year, which would amount to about a one to two percent of the total amount raised by American charities,” said Dr. Cullum Clark, SMU Director of Economic Research.
It’s a small percentage with a big potential impact. still, Clark says charitable giving has withstood tax code changes before.
“There have been dizzying changes to the tax code over time and through it all the American people have been very generous,” Clark said.