Confused? Hopeful? Concerned?
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If your congregation is like most, you have a LOT of concerns about the “Tax Cuts and Jobs Act” signed into law the close of 2017. A number of us gave our 2018 contributions early, in an effort to ensure tax deductions were in place. A lot of us have been concerned that deductions are fewer and harder to claim. What is a congregation to do? How do leaders shape upcoming stewardship campaigns and talk to members about all this?
We at S4Us are not tax experts. We always caution that before individuals or congregations make any financial decisions in which tax impacts are involved, consult with experts (a caution leaders should share with their members when discussing giving). Tax experts have already begun developing strategies and procedures to facilitate giving and to maximize opportunities for tax benefits under the new rules. Having said that, there are things that are known and things as yet unclear, and more fundamentally, reasons why we donate in the first place that are worth reviewing now. Here are our thoughts of what we would share with members:
— First, it’s likely wise to expect further changes. The IRS will review the new law and implementation/advisory guidelines developed. As this happens, it’s possible that the IRS will advise Congress of some unforeseen consequences, and modification legislation would then be in the offing. By the way, there are midterm elections in less than 10 months and the outcome there could affect all this in major ways as well. So, pay attention, and stand by. And remember that many provisions of this legislation that could be seen as positive for individuals and families expire in a few years – more changes are coming.
— Second, there are those among us whose income and spending patterns will still support itemized deductions and for those people, the basic rules remain the same in terms of declaring charitable gifts as a part of their tax calculations. The same will be true for capital campaign gifts.
— Third, there do not appear to be any changes in the option your senior members (70.5 or older) have had for some time to make contributions directly to your congregation from their IRA’s Required Minimum Distribution. That money, if given directly, is still deducted from the donor’s income basis, and so comes with a tax benefit.
— Fourth, for many of us, itemized deductions may not make sense for 2018, given that the standard deduction has doubled ($12,000 for individuals, $24,000 for couples) and therefore making the threshold for itemized deductions will be out of reach. Does that mean our gifts are no longer tax deductible? Well, in my mind, not so much. Here’s why: For me, it feels like I already received a deduction as the result of doubling the standard deduction. Should I not give to a good cause I believe in, like my congregation, even though I already have a tax benefit? That doesn’t seem right to me; I will continue to donate.
Perhaps the more important question we should all be asking ourselves is whether the existence of a tax deduction or not is so governing a factor. In candor, it likely is for many worthy causes we support, but I would submit that our congregations are different in a fundamental way. This is not just something we believe in, but something we live. This is our community, where all our values are brought to life every day. If I get a tax break, great – but this is too important to let that be the deciding factor. As welcome as a tax benefit might be, let’s not confuse nice to have with the necessity to empower giving.
So, bottom line? Pay attention and watch for changes. For some of us, no real changes, things operate largely as before. For some of us, how we calculate gifts and tax benefits for charitable giving may change, but if our priorities are unchanged, then at least some tax benefit can be considered as contained in the standard deduction. From the big picture, the important point is that most of our congregants are giving to support UU values and action; their primary motivation for giving is not a tax deduction. Some people out there assume that unless you and I get a direct and clear kickback from the government, we will not support worthy causes like our congregations’ operating and capital budgets. Let’s prove them wrong.
Bill Clontz is a stewardship consultant with the Stewardship for Us Team, supporting the UUA. Bill can be reached at firstname.lastname@example.org, via UUA Congregational Life, (http://www.uua.org/finance/fundraising), or via regional staff.
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