![]() ![]() ![]() “The changes may affect them more in the future than in the first year” of the change, said Toder. The Urban Institute’s Toder said he’s also watching 2019 charitable contribution trends for people who hadn’t known about the new write-off rules until they filled out their 2018 returns. It certainly means fewer will benefit from the deduction, and it may affect the amounts, or level, they are willing to donate." Osil, of the Lilly Family School of Philanthropy, noted: "Not knowing whether you can itemize could affect charitable giving. “It will be another year or two before we know the full impact,” Dunham said. The Giving USA researchers are curious to see whether the giving downturn in 2018 was a blip or part of a concerning trend. One factor, the article said: “an uptick in donors over 70 years old.” That’s because those people are allowed to make tax-free donations from their Individual Retirement Accounts (IRA) their other IRA distributions are taxable. In interviews with Inside Philanthropy, numerous local charity executives reported an increase in donors and gifts last year. These charity vehicles let them avoid capital gains taxes by donating stocks that had risen in value and claim immediate charitable deductions on the value of the donations.Īnd not all charities suffered declines in individual giving in 2018. It’s worth noting, said Eric Toder of the Urban Institute, that the loss of the charitable deduction “is not really affecting the highest-income givers very much, because they’re mostly still itemizing.” In other words, their write-offs (charitable contributions, property taxes, mortgage interest and more) exceed the new, higher standard deduction, so they claim them by itemizing.Īs a result of the 2017 tax law, some high-income households gave - or gave more - using sophisticated tax-saving techniques such as donor-advised funds. What the Tax Changes Meant for High-Income People “It requires planners to have a conversation with clients about charitable giving.” “ Tax reform was a game changer for financial planning and tax planning," Norley said. In a recent Fidelity Charitable survey, more than a third of financial advisers recommended that most of their clients adjust their charitable giving strategy post tax-reform. The Effect of the Change in Itemizing DeductionsĪ June 2018 American Enterprise Institute report predicted a sharp drop in charitable giving by individuals due to the 2017 tax law, saying “four-fifths of this decline is driven by an increase in the number of taxpayers who claim the standard deduction.”Īnd the Tax Policy Center (of the Brookings Institution and the Urban Institute think tanks) estimated the law would cut the number of households itemizing deductions from about 37 million in 2017 to 16 million in 2018. “If I know I’ll get a tax deduction, then, yeah, there’s a capability of giving more.”Īdded Una Osil, associate dean for research and international programs at the Lilly Family School of Philanthropy: "Taxes are not the reason people give, but they affect the timing, the amount and sometimes the vehicles donors use to make those gifts." For many, it may not be a matter of whether to give, it’s how much to give,” said Dunham. “An incentive to give will definitely increase giving, no question about that. ( Fidelity Charitable is the nation’s largest donor-advised fund, a charitable-giving vehicle managing charitable donations for people and organizations.)īut, Dunham said, tax deductibility clearly has some effect on giving. “That’s the $64,000 question,” said Pam Norley, president of Fidelity Charitable. And no one knows for sure how big a role tax deductibility plays in someone’s decision to make a charitable contribution or how much to give.
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