What Nonprofits Should Know About the New Tax Bill

While the new tax bill made no direct changes to nonprofit taxation, they did make considerable changes to individual and corporate taxes. These changes are likely to have some impact on charitable giving, which should be considered during fundraising attempts.

Individuals Will Be Reduced

A removal of many traditional expense items will make Americans far less likely to itemize their taxes. In fact, in 2018 it is likely that as few as 5 percent of households will continue to itemize. Without itemization, one of the major reasons to give to a nonprofit organization will vanish.

Many smaller nonprofits rely upon the charitable giving of middle-class American households, who will now find themselves unable to deduct their donations. This will strike primarily at end of year donations, which are often done with the express purpose of acquiring a tax benefit. However, a side effect is that many Americans may also save money on their taxes. Americans may be compelled to donate more once they see their final tax bill.

  • Courting donations on the basis of tax-exempt status will no longer be effective.
  • Build relationships with donors now in order to encourage them to donate.

More Corporate Giving May Occur

Businesses are going to find themselves with more cash, due to a substantial tax cut. These businesses are still going to see the advantages of charitable giving and are therefore more likely to give. However, businesses are also more likely to give to large, national nonprofits rather than small, local ones.

It's possible for nonprofit organization to make up for a lack of individual giving through increases in corporate donations, but it will mean a shift in how charities complete their fundraising. Companies give to charities both to fulfill their values and mission statements as well as for advertising and exposure, which is something nonprofits will need to keep in mind.

  • Connect with local businesses and build relationships with professional contacts.
  • Use social media and other forms of advertising to make corporate interactions visible, inspiring other companies to connect.

Of course, only about 30 percent of American households itemized their taxes to begin with -- but for many organizations, this demographic may have comprised the majority of giving. Adapting your fundraising methods and building strong relationships may help in mitigating these changes.
 

State Charity Registration

State Charity Registration

There are approximately 45 states which have laws governing charitable solicitations.

Learn More
All CCS Services

All CCS Services

We ensure your charity is registered and can legally receive contributions.

View Services
Charity Compliance Solutions Resources

Resources

Up to date information to keep your organization on track.

View All