Last night President Trump signed the new economic stimulus package that provides $900 billion in emergency relief funds. Although the discussion has understandably focused on the $600 stimulus checks, there are also significant provisions associated with charitable giving and the nonprofit sector.
Keep in mind that these are not the primary reasons a donor makes a gift. Your mission matters the most. Tax planning affects how they give, not why.
In November 2019, the Giving USA Foundation published a special report associated with its research of planned giving donors and their motivations to give. This study, "Leaving a Legacy: A New Look at Planned Giving Donors," was based upon national survey results from more than 860 planned giving donors and an additional 40 personal interviews. The study provides information on key trends, motivations, and insights.
Here are key findings and three practical implications for your planned giving program from this valuable research:
In December 2017, Congress passed and the president signed the Tax Cuts and Jobs Act (TCJA), which contained what many describe as the most significant changes to the tax code since 1986. During 2018, we received many questions from our nonprofit clients about the implications of these changes for their donors.
1. What is the most significant tax law change that could affect the short-term philanthropic planning of our donors and, therefore, our annual giving program?
The 2017 tax law change nearly doubled the standard deduction for individuals (from $6,350 to $12,000 and from $12,700 to $24,000 for married couples filing jointly). This means that fewer taxpayers will claim itemized deductions. Research has shown that those donors who claim itemized deductions are more likely to give consistently (should we say that this may be correlation rather than causation). In the recent past, approximately 30% of taxpayers have claimed itemized deductions. As a result of the tax law change, it is estimated that approximately 15% to 20% of taxpayers will continue to itemize their deductions.