Charities fear hit after tax changes

Many U.S. charities are worried the tax overhaul bill signed by President Donald Trump on Friday could spur a landmark shift in philanthropy, transforming charitable gift-giving into a pursuit largely left to the wealthy.

The source of concern is how the tax bill is expected to sharply reduce the number of taxpayers who qualify for the charitable tax deduction — a big driver of gifts to nonprofits.

One study predicts that donations will fall by at least $13 billion, about 4.5 percent, next year. That decline is expected to be concentrated among gifts from the middle of the income scale. The richest Americans will mostly keep their ability to take the tax break.

That could create new winners and losers in philanthropy. Nonprofits have long noticed that the wealthy are more likely to cut big checks to support museums and universities, while smaller donors tend to give to social-service agencies and religious organizations.

“The tax code is now poised to de-incentivize the heart of civic action in America,” said Dan Cardinali, president of Independent Sector, a public-policy group for charities, foundations. “It’s deeply disturbing.”

At the United Way, middle-class donors are the charity’s “bread and butter,” said Steve Taylor, vice president for public policy at United Way Worldwide.

The charity’s average annual gift is $379, mostly from people who pledge to have $5 to $10 a week deducted from their paychecks.

Taylor worries the tax bill will force United Way to change whom it targets for fundraising.

“We don’t have any choice but to look to those higher-end donors more. We have to,” Taylor said. “But it’s not really what we want to do, and it’s not really healthy for the charitable sector in America.”