As predicted in late fall 2017, the changes to the US tax code are substantial and the nonprofit sector is significantly impacted. The National Council of Nonprofits has a helpful checklist to apprise nonprofit organizations of the largest issues of which they need to be aware; Guidestar provides a summary of the ramifications of the legislation.
The biggest impact is that the law doubles the standard deduction, which will likely deter millions of taxpayers from itemizing deductions. Further, state and local tax deductions are capped at $10k, which will have a more significant effect in states outside Texas and six other states. One bright spot is that the legislation raises giving limits for higher-income taxpayers who itemize deductions from 50% to 60% of adjusted gross income. There is also a tax break for older donors via the charitable IRA rollover, whether or not deductions are itemized.
Once internal stakeholders have a firm grasp of the potential bearing on philanthropic giving, it is time to be proactive and think about options. There has never been a better time to invest effort in getting to know your donors and prospective donors. For many nonprofits, that means doing some research and getting to know the latest generation of donors and how their “wants” are different from the previous norms. For instance, a growing number of donors do not want to be seen as a base source of funds; these donors would rather take an active part in the success of the mission. Find ways for donors to be involved in the organization such that they feel a sense of ownership and develop a relationship with the board and staff. At the very least, communicate with them in between asks!