The Tax Cuts and Job Act was passed in December 2017, but the total impact to nonprofits will not really be known until we get through 2018. The reason, not only are there direct impact items in the Act, but there are also indirect impact items. It is very likely that the indirect impact items will have a greater effect on nonprofits.
For direct impact there are six primary items affecting nonprofits, and it is quite possible that none of these items will affect your organization.
The indirect impact of the tax reform act seems to be generating more concern. Will donors continue to donate at the same level if they are not receiving a tax deduction? There is no way to gauge this. While many donors give to support the public good, there are those for which a reduction in taxable income is an incentive to donate. To better understand the indirect impact of the tax reform act, we have summarized some of the pertinent provisions related to charitable giving.
So while there is a chance that there may be a reduction in giving for those no longer itemizing, there is also opportunity for increased giving from high net worth donors. In addition, there are still some charitable giving tools that continue to receive beneficial treatment.
Overall, the industry feels that donors will continue to support causes and organizations that they care about, so good stewardship continues to play a prominent role in charitable giving. Consider reaching out to your donors to acknowledge the change in tax incentives and to keep them up to speed on those giving methods that still receive favorable tax treatment.
As always, UHY, LLP is here to help. We invest significant time in understanding tax reform and other developments in the nonprofit sector in order to ensure the success of our clients. Please do not hesitate to contact your UHY LLP team member if you are in need of assistance.