Austin nonprofit groups are bracing for a potential drop in annual donations if changes to the federal tax code become law and remove incentives for charitable giving.
Both U.S. House and Senate bills propose a tax plan that would raise the standard deduction and as a result reduce the number of taxpayers who itemize. The proposed changes, according to a study by the Indiana University Lilly Family School of Philanthropy, would reduce charitable giving by up to $13.1 billion.
“That’s a huge impact on the philanthropy and nonprofit sector,” said Mike Nellis, CEO of Austin Community Foundation. “At a time when government spending on basic needs is being reduced, we should be encouraging philanthropy, not discouraging it.”
House Republicans, who passed their version of the bill Nov. 16last week, have said an overhaul of the tax code would help simplify the process of filing taxes and bring $1.5 trillion in tax cuts over a decade. Republican lawmakers hope to pass a tax plan by the end of the year.
To offset the projected loss of charitable giving under the proposed tax bills, the Salvation Army, one of Austin’s largest charities, has backed the enactment of a universal charitable deduction amendment, which would provide deductions for charitable gifts on top of the standard deduction.
“Our ability to serve tens of thousands of people in the Austin area depends on the generosity of Austinites,” said Jan Gunter, deputy development director for the Salvation Army Austin. In 2016, the nonprofit received about $6 million in contributions to help fund services such as sheltering those experiencing homelessness.
Gunter said the nonprofit is expanding to meet the area’s increasing demands and has plans to build a new community center as well as a shelter for women and children. “As the need is growing, it’s not a time for uncertainty,” she said.
The Salvation Army has created a call-to-action campaign, encouraging its donors and supporters to reach out to lawmakers to tell them to support the amendment.
“I don’t think people give because of tax issues,” Nellis said. Austin Community Foundation supports a tax code “that preserves the full scope and value of what’s in place now,” he said.
“Donors care about community, causes and people,” he said. “It’s part of the fabric of who they are, but how much they give and when they give is determined by taxes, especially for high net worth individuals.”
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Charitable donations by individuals are a vital part of the sustainability of a nonprofit organization, said Celeste Flores, executive director of I Live Here, I Give Here, which produces the online giving campaign Amplify Austin. In 2017, the campaign raised more than $9 million for 700 groups in 24 hours.
Last year, individual donors made up 72 percent of contributions to charities, according to Giving USA. Most individual contributions are donated at the end of the year, Flores said.
The Salvation Army raises more money in November and December than in all other months combined. And on the last two days of the year, it raises more money than in all of November, Gunter said.
This year, I Live Here, I Give Here has partnered with the Giving Tuesday campaign, a global movement that begins the Tuesday after Thanksgiving and kicks off the charitable season. The nonprofit’s website, amplifyATX.org, will act as a nonprofit search engine to find causes and organizations that people can help fund. Its goal is not only to raise monetary donations, but to boost acts of service such as hosting a food drive or adopting a pet.
Flores hopes the campaign inspires new donors to invest in the Austin community. Ensuring that a younger generation of donors begins to invest locally is key to the future of the city’s nonprofit sector, she said.
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