The GOP tax overhaul is giving some nonprofit organizations holiday heartburn. The reason: itemization. More specifically, it’s the lack thereof.
Right now, taxpayers can write off charitable donations if they itemize their tax deductions.
Under the new law — parts of which go into effect Monday — the standard deduction is nearly doubled to $12,000 for individuals and $24,000 for married couples. That increase is meant to give most people a tax cut, at least initially.
But it means fewer people will itemize their deductions. And nonprofits fear that will cause donations to dip, particularly from people in the middle class, who historically have itemized more deductions than their upper-class counterparts.
How much the new tax law will affect nonprofits may depend on what kind of work they do.
Organizations that provide human services could take the hardest hit because they rely the most on private donations and limited public funds.
“A lot of the organizations that provide services to the most vulnerable are already financially fragile, so in this season of giving, it’s important to make sure that we continue our support for them and call attention to the work that they do,” said Pedro Ramos, president of the Philadelphia Foundation.
Jeannine Lisitski, executive director of the organization Women Against Violence in Philadelphia, said nearly 20 percent of its annual budget comes from private donations from either individuals or corporations.
Any drop could mean less money for counseling and other interventions meant to help women break free from the trauma of domestic abuse, she said.
“We’re not going to be able to interrupt it and change the pathway that people are on in terms of health and well-being and safety,” said Lisitski. “And it perpetuates cycles – generations of violence.”
That’s why, as many taxpayers are rushing to prepay their 2018 property taxes, Women Against Abuse and many other organizations are urging donors to give next year’s donations now while the old tax law still applies.
Executive director Shira Goodman has noticed a bump in donations to CeaseFire PA compared with last year. Going forward, she hopes that trend continues, even though the practice of itemizing deductions won’t be necessary for most people.
“I’m hopeful that people who find our work meaningful will support it,” said Goodman.
Disclosure: The Philadelphia Foundation supports WHYY.