A Perfect Storm that May Cost Charities Billions

A perfect storm is brewing in the heart of the nation’s capital.

It’s called tax reform. And its impact could be billions of dollars lost in giving to nonprofits every year.

ECFA recently hosted two of the top experts in charitable giving and tax policy for a 1-hour webinar on all the latest developments. Here are 3 important takeaways from the conversation with our special guests Michael Batts and David Wills:

  1. Tax reform is more likely now than it has been in decades. Leaders across the political spectrum agree something must be done about the growing complexity of the tax law. Since the federal tax code last underwent major changes back in 1986, the code and related regulations have ballooned to over 10 million words. It has been more than 30 years since the last significant reforms because making these changes in the tax law requires close cooperation among different branches of government. With one party now occupying leadership in the House, Senate, and White House, the chances of seeing tax reform pass are much more likely.
  2. Changes to the charitable deduction could cost nonprofits billions. A very important provision in the tax law for nonprofits is the 100-year-old charitable contribution deduction. Studies have shown the charitable deduction is very effective as a matter of tax policy, both influencing when and how much Americans give to nonprofits. Congress is considering multiple changes to the charitable deduction and other tax provisions that would decrease incentives to give and cost charities billions of dollars in giving.
  3. You can make a difference. Tax reform is still a work in progress, and there is time to influence the laws that could impact our churches and ministries for generations to come. There are certain proposals like expanding the current charitable deduction for itemizers to a universal charitable deduction (also known as the above-the-line deduction), which could actually lead to an increase, rather than a decrease, in charitable giving. But to maintain or even strengthen the charitable deduction, Congress and the White House will need to be encouraged by real stories of impact from nonprofits that benefit from these important giving incentives.

For more tax reform insights and practical tips from the experts, catch What to Look for in Charitable Gift Tax Reform – the latest FREE webinar-on-demand from ECFA.

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.


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