Nonprofits Expect To Take Big Hit From New Tax Law
PHILADELPHIA (CBS) -- Rather than cheer the New Year, nonprofit leaders around Philadelphia are concerned about what will become of donations, because fewer people will qualify for a tax deduction.
There is a chill in the air for nonprofits, and it's not because of the frigid weather outside.
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The standard tax deduction is doubling to $12,000 for individuals and $24,000 for married couples. If the standard deduction is greater, fewer taxpayers are likely to itemize, and claim the charitable deduction.
Executive Director Michal Smith of the Cradles to Crayons organization says "children in need will suffer."
"Because there's always an incentive to put a little bit more in a donation when you know that you're going to receive a tax deduction at the back-end," he said.
While the magnitude of the effect is subject to debate, the Washington-based Tax Policy Center estimates individual giving will decline by around 5 percent. Right now, only about 30 percent of Americans itemize their taxes, and only those who do can take charitable donations out of their taxable income.
Smith says Cradles to Crayons' individual base supplies 40 percent of its revenue, and the nonprofit does not receive federal or state funding.
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At Red Paw Emergency Relief Team, a nonprofit organization dedicated to rescuing pets, founder Jen Leary says donations comprise more than 90 percent of her budget.
She notes donations fell off more than 40 percent late into 2017, because folks were probably giving to pressing catastrophes like hurricanes and fires.
