GOP tax plan could lower charitable donations by $20 billion in 2018

Posted at 5:35 PM, Dec 21, 2017
and last updated 2017-12-21 17:38:28-05

GRAND RAPIDS, Mich. -- The recently passed GOP tax plan is causing concern across groups, including how it may not be so giving to charities.

The new tax code will nearly double the standard deduction when taxpayers itemize their deductions: increasing to $12,000 for individuals, then $24,000 for married couples. The concern among many non-profits in West Michigan is if people don't itemize their tax deductions, will they continue to donate to charity?

"We are concerned because less donations will more than likely mean less service, if it’s a dramatic number," said Major Normal Grainger, the Salvation Army Kent County Coordinator.

According to the Tax Policy Center's latest estimate, this tax legislation could reduce charitable giving between $12 to $20 billion just in 2018. The Center estimates $4 billion less given in the long run due to the repeal of the estate tax.

"When you change charitable giving incentives, behaviors change," said Kyle Caldwell, Grand Valley State University's Dorothy A. Johnson Center for Philanthropy Executive Director.

"Michigan was fortunate to have Michigan charitable tax credits, many years ago they were rescinded, and what we saw was a dramatic fall-out in the number of people who gave to the very organizations those tax credits were targeted to support."

Mel Trotter Ministries' President and CEO Dennis Van Kampen tells FOX 17 they began strategizing to become more self-sufficient and less reliant on donations in recent years. Though he thanks and urges their nearly 21,000 annual donors to continue to contribute.

"I think what we would do is just ask the people of Grand Rapids, Kent County, West Michigan to do what they’ve always done," said Van Kampen, "and to be generous with what they’ve been given because the need for people working with people experiencing homelessness is not going away."

Concern is based on estimates at the moment, while we should learn the financial impact of the tax code on charitable giving around this time next year.