HANCOCK COUNTY — Nonprofit leaders say they’re not yet worried about changes to federal tax law that could decrease donations, but they’re preparing in case they see a drop in charitable gifts.
A 2017 study from Indiana University’s Lilly School of Philanthropy shows recently enacted changes to the U.S. tax code might result in less of an incentive to donate to charities. The standard deduction, a dollar amount non-itemizing taxpayers can deduct from their total income tax, roughly doubled under changes brought forth by the Trump administration. As a result, the number of people who itemize their deductions, receiving tax breaks for their contributions to charities, is expected to drop significantly, according to the study.
The study examined how key changes to the tax code could impact the amount of donations nonprofits receive. The study estimates the changes will result in charities across the U.S. seeing a drop in donations from 1.7 percent to 4.6 percent per year, the study found.
For a small nonprofit organization serving Hancock County, that drop would represent fewer people in need being served. Despite this, leaders of area nonprofit organizations said it’s not the tax break that leads their benefactors to donate in the first place.
The majority of people who give to a charity either believe in its mission or trust the judgment of the person asking them to give, said Denise Arland, executive director of Families United for Support and Encouragement, a local organization that helps families of children with disabilities.
“We’re monitoring the situation, but we’re not really freaked out about it,” she said. “Most people who give to us are compelled to because they have a relationship with someone with a disability.”
She added that in her experience and in her training as the leader of the nonprofit, which sponsors education, support groups and programs for children and families with disabilities, the most common reason people give to a charity is simple: someone asked them to.
“If you believe in a cause and ask somebody to give to it, if they respect you, they’re often inclined to support what you support,” she said.
Rick Walker, director of the Hancock County Veterans Park, said he believes those who donate to the downtown memorial park are motivated more by a wish to honor a loved one who served in the armed forces than any potential tax breaks.
“The whole spirit of the park is to make sure our veterans are remembered,” he said. “I’ve never felt like getting a tax break is one of the higher priorities of our donors.”
Despite their confidence in the motivations of their contributors, Arland and other nonprofit leaders are prepared to implement additional fundraising if needed.
Dennis Porter, director of the Arc of Hancock County, said the majority of the organization’s funding comes from the interest of its endowment, stewarded by the Hancock County Community Foundation. However, the Arc has in years past organized a golf scramble fundraiser to bolster its bottom line, he said. If its funds fall short, that’s a likely option for the charity, which helps families with referrals and advocacy for their children with disabilities.
