Public universities and nonprofits aren’t sure whether recent changes to the tax code will reduce donations, but some aren’t taking any chances.
The Republican tax overhaul approved last year still lets people deduct charitable contributions, but it also made changes that disincentive reasons to donate. Some universities and nonprofits, dependent on charity to fund everything from scholarships to community services, are wary of the changes and mulling ways to educate donors that it's still worth giving, despite fewer tax breaks.
“We’ve discussed that and we are kind of anxiously awaiting to see what will happen with giving,” said Shannon Jenkins, president and CEO of United Way of East Central Alabama in Anniston.
The tax overhaul raised the standard deduction to $24,000 for millions of Americans. The concern is that taking the standard deduction makes more financial sense than filing itemized deductions for many taxpayers. If fewer people itemize, then that could mean fewer donations since charitable giving can only be deducted by itemizing them on tax returns.
United Way is already wrapping up its latest fundraising campaign. Jenkins said United Way, which supports 33 partner agencies and various initiatives, raised $937,721 in its latest fundraising campaign that started in August.
Jenkins said United Way staff have started thinking about the next campaign and how to continue to raise donations despite possibly fewer incentives.
“This is something we’ve already discussed … but we’ve been talking about diversifying our revenue by going after larger grants,” Jenkins said. “When you’re 90 percent dependent on individual donors and corporate donors, that’s putting all your eggs in one basket.”
Shane Ruffin, CEO of the YMCA of Calhoun County in Anniston, said there’s been talk of concern from the Y on the national level about how the tax changes could hurt donations. Ruffin said he doesn’t expect much drops in donations for the county Y, however. The program started its annual fundraising campaign earlier this month.
“Our donor base is so strong, we don’t expect too much attrition,” Ruffin said. “If tax incentives do come up in conversation though, we’ll be ready to articulate our needs.”
Charles Lewis, vice president for university advancement at Jacksonville State University, recently gave the JSU board of trustees an overview on how the tax overhaul could reduce giving to the Gamecocks.
“Since many of our alumni take the standard deduction, we could see a drop in donations,” Lewis said.
Besides the change in standard deductions, public universities also must contend with alterations to tax deductions for donations to college sports programs.
In many major college athletic programs, fans are required to donate money for the right to purchase athletic season tickets. Up to 80 percent of those donations were tax deductible.
The new tax law repealed that deduction.
Lewis said JSU collected $300,000 in donations from the sale of suite and club level seating last year.
Lewis said the university is soon starting a new marketing campaign and plans to incorporate new methods to encourage people to donate despite fewer tax incentives. Some of those methods include making short videos highlighting how donations help the university.
“We’ll start trying to show the impact those donations have on students and the area,” Lewis said.
Jane Parker, vice president for development at Auburn University, said her campus also has an eye on what the tax law could mean for donations.
“I would be surprised if any institution or nonprofit didn’t have any concern about it,” Parker said. “Donations are a vital part of funding.”
Parker said that at Auburn, donations to athletic programs help pay for student scholarships.
“We notified our ticket holders last year that this change was impending and if they wanted the tax deduction, they should go ahead and purchase tickets. “Some people elected to do that.”
Jennifer Maddox, president and CEO of the Anniston-based nonprofit Community Foundation of Northeast Alabama, said the tax law has been discussed by officers of her organization. Maddox said that for the most part though, she didn’t expect her nonprofit’s donors to be swayed by fewer tax incentives.
“Certainly the donors we work with typically want to leave a charitable legacy,” Maddox said. “Certainly a lot of people give regardless of a tax break.”