Tax Act: Nonprofits left wondering about future of donations
It may be harder to get the tax deductions from charitable donations you're used to in this fiscal year due to a tax law change.
People may be dissuaded from donating in future years like they used to because of the new tax act on charitable deductions and nonprofits are concerned.
Goodwill is one of many nonprofits that rely on individual donations, but like many other nonprofits, they said they don't know if their donations will be decreasing in coming years.
The Tax Cuts and Jobs Act, passed in late 2017 under the Trump Administration, has almost doubled the charitable deductibles.
According to the act, one household's standard deduction is now $24,000 - up from $13,000 previously.
For individuals, it is now $12,000 which up from previously $6,500.
"There could be a lot of people who really don't understand the tax act yet. But when they go to do their tax returns, they're going to see that they can't take those Goodwill deductions anymore," said Goodwill Industries Chief Financial Officer Cheryl Brei .
Brei said she wouldn't knock the Tax Cuts and Jobs Act and what it's doing. They said the organization won't know if cash donations will be affected this year, but once people find out that they can't get tax benefits they're used to, they may see an impact.
"That could slow down in the next years, people bringing donations to our store. Because there's a lot of opportunities for people to take their donations to a lot of different places," Brei said.
The Grand Island Community Foundation (GICF) works with several nonprofits in the city, and they also said there is uncertainty in the air.
"They are concerned that it is going to lead to those smaller donors or middle of the road donors not to give anymore because they don't have an incentive," said CEO of GICF Melissa DeLaet.
DeLaet said this doesn't mean donors won't be giving anything.
"Ninety-five percent of donors aren't giving for a tax deduction. They're giving because they're passionate about a cause or they really believe in an organization. But there are some individuals who give and they are very aware of the fact that they are able to take that tax deduction," DeLaet said.
She said it is going to depend on the individual on whether or not this tax law will change donations.
"It does leave the nonprofit community scrambling and wondering what they're going to look like for their future," DeLaet explained.
The Community Foundation encourages people to go see their tax professional to see if the tax act impacts their taxes at the end of the fiscal year.