By Steve Moore, Executive Director, Murdock Trust
It is once again that time of year when Americans must fire up their computers or visit their accountant and revisit their finances through the lens of Uncle Sam. As hundreds of millions of us file our taxes, we are once again reminded of the impact of the tax reform changes enacted at the end of 2017 and the potentially long-ranging effects they have had and will continue to have on the nonprofit community.
Hard data is difficult to come by at this stage, however estimates compiled by the National Council on Nonprofits suggests that the revised policies regarding charitable deductions could cost the nonprofit community $13 billion per year impacting programs and projects as well as resulting in the elimination of around a quarter-of-a-million jobs in the nonprofit sector. While the nonprofit community continues to work with lawmakers to address these changes, local citizens can and should pay close attention to how they support these valuable organizations and whether strategic adjustments by individuals could increase the impact of the contributions they make. There are two main questions that citizens should consider at this time of year.
Do you have more that you can contribute to those in need? First and foremost, we hope that the economic reality facing nonprofit organizations serves as a call to action for individual donors. The nonprofits and groups that work tirelessly to serve and uplift our local communities are facing significant financial hardships. Financial giving is personal to every family, however, tax season is an ideal time to consider how and where you are making donations as you are already reviewing your family’s broader economic picture. If you were fortunate to receive an increased refund or reduced tax requirement as a result of reform, could you invest some of that gain back into your community?
Could you adjust your giving for the long-term? While many of us make personal donations in the moment to specific organizations, newly developed resources are emerging to help us make a larger contribution over a longer period of time. Long utilized as a tool by community foundations, donor advised funds can now be implemented in a variety of other ways, including as a helpful tool by individuals to generate sustained giving to the nonprofits that have a specific connection to you, your family or your community.
For example, Fidelity Charitable recently announced that its donor advised funds awarded more than $5 billion in grants last year, an increase of 17-percent. Similarly, the National Philanthropic Trust made more than $1 billion in grants, a 12-percent year-over-year increase. By taking a step back and thoughtfully planning, you may see that your donations could have a more expansive impact if you reorganize the way you contribute. While major national investment organizations can assist in establishing and managing a donor advised fund, there are also a number of local organizations that have been at it for decades– The Oregon Community Foundation, The Seattle Foundation, The Alaska Community Foundation, The Montana Community Foundation, and The Idaho Community Foundation to name just a few – that can help ensure that your financial contributions are directed to organizations serving your local community. Regardless of our personal politics or our individual views on tax reform as a broader issue, we all have a responsibility to partner with and support the organizations that are working to serve the common good. Just as it has become the norm to check your smoke detectors when you set your clocks back for daylight savings time or evaluate your family budget when a new year begins and our personal withholdings are adjusted, tax time should be a time when we all revisit our giving plan for the new year and see how we might be able to maximize our impact.