Charitable Sector Starting to Digest Tax Reform Implications

Monday, January 22, 2018

The Tax Cuts and Jobs Act was passed in late December 2017 to be enacted in January 2018. With such a short window for implementation planning, everyone, including nonprofits and foundations, is scrambling to understand the large and small implications that impact them and their work. It was clear throughout the policy making process that the bill wasn't going to be good for charitable giving or the independent sector. According to Politico reporting, nonprofits took a "double whammy." The doubling of the standard deduction means that much fewer people will itemize and thus the charitable giving deduction will be available to only the highest-income earning Americans. Politico also points out that the state and local tax deduction (SALT) cap further hurts charities, as those from higher-tax states will be further away from itemizing than they previously would have been due to the SALT cap. MCF and other sector advocates pushed for a universal charitable deduction, which would offer all Americans equal access to this deduction, but this proposal was unfortunately not adopted.

Earlier in January the National Council of Nonprofits did an excellent webinar digging into the practical implications of tax reform for nonprofits, from payroll to benefits to fundraising to advocacy. MCF encourages its members to watch the webinar to better understand impacts on grantees and on themselves.

With so many large scale changes upon us, the sector is working to understand the tangible impacts right now as well as what policy solutions may be available going forward. There may also be more defensive policy challenges on the horizon, with whisperings that Congress may look to include items that were taken out of the bill due to the Byrd Rule (such as the weakening of the Johnson Amendment) in a 2018 clean-up bill.

Look for more information and resources from MCF as we work with our national partners at the United Philanthropy Forum, the Council on Foundations, the Independent Sector, and the National Council of Nonprofits to navigate this new reality. 

Find More By