Jeb Bladine: Think about tax law impact on donations
Americans may be absorbed with late-stage holiday shopping, but their growing Christmas spirit also kindles a surge in charitable donations. Informed sources estimate that 30 percent of charitable giving occurs in December, including 10 percent in the final 48 hours of the year.
If people pay attention to details of the federal tax bill projected for passage this month, charitable giving should spike even more significantly before Dec. 31. Profitable corporations, in particular, should be considering increased giving opportunities this month.
This is no small matter for charities and people in need. Charitable giving could exceed $400 billion this year, and most of that — 72 percent in 2016 — comes from individuals.
Statistics from a Giving USA annual report assert that American individuals donated $282 billion in 2016. Foundations gave $60 billion, bequests (estates) $30 billion and corporations $19 billion.
Come on, corporations, step up! With corporate tax rates expected to drop steeply in 2017, the tax-deductible value of those contributions is at its highest right now. Of course, in defense of corporate donation statistics, many of them are pass-through entities sending profits to people who, in turn, make individual contributions.
You might wonder where all that money goes. Giving USA has these answers for 2016: By far the largest portion, $123 billion, went to religious groups. Other categories of charitable giving included $60 billion to education, $47 billion to human services, $41 billion to foundations, $33 billion to health, $30 billion to public benefit groups, $22 billion to international charities, $18 billion to arts, culture and humanities, and $11 billion to environmental and animal causes.
So, what about that new law? Headlines are replete with news of a deal between House and Senate versions of tax reform, but many details are moving targets that won’t be confirmed for a week nor fully understood for months.
Let’s assume, as projected, the top corporate tax drops from 35 percent to 21 percent. That means corporate contributions in the next two weeks would generate a 14 percent higher tax benefit than the same donation made in 2018.
Owners of pass-through business entities may receive a 20 percent deduction on taxation of that income. If so, those people might consider pre-paying donations otherwise planned for 2018.
For many other taxpayers, projected doubling of the standard deduction could eliminate their financial incentive to make charitable donations. Anyone in that situation — based on professional advice, not this column! — should double up on contributions made in 2017.
Bottom line: While you shop, shop, shop, be thinking about a late-month opportunity to give, give, give.
Jeb Bladine can be reached at jbladine@newsregister.com or 503-687-1223.
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