Note: Information provided does not constitute and should not be interpreted as an endorsement of any political party, nor should the analysis be considered legal or tax advice.
If you attended a recent EBCF workshop on the Impact of Tax Reform or have stayed abreast of how the new legislation will impact individuals and families, you’re likely thinking about how this affects charitable giving. While the new tax legislation does not remove the ability to deduct charitable contributions, it does raise the standard deduction rate and reduce many itemized deductions, which experts are now fairly certain will reduce the incentive for some households to make charitable donations. A recent study projected a decrease of approximately 4% (vs. ’17 giving) – or about $17 billion.
Even though charitable donations are not given for the expressed purpose of reaping tax benefits, maximizing tax savings each year is an important consideration. For example, the new tax law nearly doubled the standard deduction so many will choose not to itemize deductions in 2018. To itemize your 2018 tax return, a married couple would need itemized deductions in excess of $24,000 ($12,000 for single filers). Otherwise you would simply use the standard deduction and lose the opportunity to deduct charitable gifts.
Instead of taking the standard deduction and losing the deductibility of your charitable contributions, interested donors might consider the “bunching strategy” in combination with a Donor Advised Fund. With the bunching strategy you’d estimate your charitable contributions for, say, three years and make the entire contribution in one year where you’ll itemize your tax return; then use the standard deduction for the next few years with no charitable contributions and repeat the process. If you don’t want to give three years’ worth of gifts all at once you can spread them out over several years, while still receiving tax benefits at the time the funds are deposited in your Donor Advised Fund at EBCF.
We know that the ability of our local partners to continue to maintain the level of their day-to-day operations will be impacted by this tax reform. These are critical organizations who work in human services, education, in empowering our young women and boys, in supporting the arts, protecting our environment, and so much more. They are the backbone of our East Bay social network.
We will continue to keep you updated on the ongoing impact of the current tax reform on our local East Bay non-profit partners, and we invite you to lean in with us to think about short term and long-term solutions to support critical community based organizations in our region.
In the meantime, for those of you thinking about your charitable giving and the potential impact of the tax reform on your giving, following are a few things to consider during the last days of 2018.
Talk With Your Tax Advisor: We recommend you consult your tax or financial advisor to determine if increasing your charitable giving in 2018 will be beneficial for your situation.
Contribute to Your Donor Advised Fund at EBCF or Open a Fund at EBCF” Contributions to your donor advised fund made this month will be deductible on your 2018 tax return. Adding to your fund at EBCF is simple. Click HERE for instructions on making a gift to your fund.
And, if you know of a family member or friend who may benefit from opening up a fund at EBCF before December 31st, please contact us so that we may help them get set up right away. Establishing a charitable giving fund at the East Bay Community Foundation allows you to make a contribution of assets now and remain actively involved in suggesting uses for your giving in the future. Opening a fund allows you to receive an immediate tax deduction for your gift, while giving you time to make grants to the community now and into the future. And, being part of the EBCF family opens you to learning experiences about what’s happening in your local community, and how you can make a deeper difference with EBCF’s expertise. Opening a fund at EBCF is fairly simple and quick. Join us!
For a reminder of year-end giving deadlines, please click here.
Contact Our Development & Donor Services Teams: Should you have any questions or need any support, we stand ready to serve as a resource and partner for your charitable giving. Reach our team of experts at (510) 836-3223 or at: firstname.lastname@example.org.
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