Charitable donations struggle after tax reform
COLUMBIA - CoMoGives passed $100,000 of donations Tuesday on the third day of the month-long fundraising campaign for nonprofits in mid-Missouri.
But for the man who started the campaign seven years ago, it’s not all a celebration. John Baker is the executive director of Community Foundation for Central Missouri, the organization that runs CoMoGives.
He said the Tax Cuts and Jobs Act, a tax reform bill that went into effect in January 2018, has suppressed small and medium-sized charitable donations.
“Last year the campaign officially collected $805,000,” he said. “In my heart of hearts, I think we should have received $850,000 based on past years’ performances, and I think part of the reason was the 2017 tax reform act because the donations we receive are the type that have been somewhat suppressed because of the tax reform.”
One of the main changes of the tax reform bill was to increase the standard deduction. This is the amount of income that isn’t taxed.
For a married couple, the deduction used to be $13,000. Under the new law, it’s now $24,000.
Taxpayers have two options: take the standard deduction or itemize their expenses. If the total of itemized claims is higher than the deduction, that’s the amount of income that isn’t taxed.
Because the standard deduction is now higher, fewer households have itemized expenses that are greater than the deduction. This means more people are taking the standard deduction, which Baker said reduces the incentive to donate to nonprofits.
Nationwide, charitable donations were down 1.7 percent last year, according to the IRS. Baker said when he broke that number down, small and moderately-sized donations decreased by $20 billion. Large donations by a smaller number of people made up the difference.
However, not all donors have given up giving to charity.
Elizabeth Hammel said she still donates because she recognizes some people in the community have not been as fortunate as she has.
“I mean, you’ve got everything, you know,” she said. “You’ve got food, you’ve got a car, you’ve got a house. And there’s a lot of people out there who don’t have that. I always try to teach my kid that, if you can afford it, a dollar here, a dollar there never hurts, and you wouldn’t believe how many people it makes happy.”
Baker said small donations like Hammel’s are crucial for local nonprofits.
“It’s the modest to small donor that is the heartbeat of many nonprofit organizations and the gifts that they depend on every single year.”
CoMoGives runs through December 31, 2019. The goal is to raise $900,000 for 138 nonprofits in Columbia, Jefferson City and Boonville.