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Tampa Bay charities worried tax code changes could hurt donation efforts

Less Americans expected to "itemize" in 2018
Posted at 5:47 PM, Dec 28, 2017

TAMPA, Fla. — Right now charities are rushing to collect donations before the end of the year.

Many people make donations in December so they don't have to pay as much in taxes in the Spring.

But changes to the U.S. tax code could hurt some Tampa Bay Area charities, by making it financially more difficult for some people to donate.

"Our hope is people will continue to give because of what we're accomplishing. but we simply don't know," says Stephen Koch, President of Big Brothers Big Sisters of Tampa Bay.

Pairing mentors with local kids in need, and providing all involved a support system that includes educational resources and safety oversight, is a costly service for the local chapter of the national non-profit organization, says Koch.

It's an organization that relies in part on end-of-year charitable giving, spurred by the financial incentives the tax system has provided.

"People who are going to give believe in the cause, first and foremost," says Koch of the generous donors of Big Brothers Big Sisters. "They also look at all the factors going on and one of the factors is what's going to be this tax benefit to me."

But next year that tax incentive will disappear for many Americans.
 
The new tax bill, just signed into law by President Donald Trump, will make it financially better to just skip a process called "itemizing." It's a tool through which people can pay less in taxes by giving to a charity instead.

Of the 45 million Americans who itemized their taxes last year, an estimated 38 million of them will choose instead to take the "standard deduction" offered by the federal government, according to The Tax Policy Center.

With fewer people itemizing, fewer people are expected to donate to charities as a "write-off," potentially costing charities nationwide billions of dollars.

That's sending chills down the backs of local non-profits helping the Tampa Bay Area.

"We are going to be crossing our fingers and be hopeful that the generosity we've seen now will continue regardless of what happens over the coming year," says Clara Reynolds, President of the Crisis Center of Tampa Bay.

Reynolds tells ABC Action News that keeping their doors and phone lines open 24/7 to help local people in need costs nearly $2 million a year.

"That's over $100,000 a month that has to be brought in to make that lift happen," says Reynolds, adding that much of that giving comes at the end of the calendar year because of the tax incentives, as well as the spirit of the holiday season.

"That's where the magic really happens is when individuals go, you know, I have enough stuff, my family has enough stuff, but that $50, that $100 or that $20 could make such a difference in the life of somebody that needs that level of support and help," says Reynolds, who hopes that kind of giving won't go away just because the tax deductions have.

But the early estimates don't look promising. 

The passage of the Tax Cuts and Jobs Act will result in a decrease of $16-$24 billion in charitable giving every year," said the Council on Foundations in a statement after Congress passed the bill in December, adding it "will significantly decrease the philanthropic sector’s ability to provide resources and services to people across the United States and abroad."

As it is, some Tampa Bay Area charities are seeing some signs of "donation fatigue" after several natural disasters in the United States including flooding around Houston, and hurricane damage in Florida and Puerto Rico.

That fatigue may be the reason the Salvation Army of Tampa is down 10 percent from their usual donation amount.

The local charity hopes to make it up during the final few days of December; last year they made more money online on December 30 and December 31 than they did during the entire month of November.

That kind of end-of-year giving demonstrates the effectiveness of the tax incentives.

"We, as a country, reward and incentivize charitable giving," says Captain Andy Miller to ABC Action News.

"We don't have anything against increasing the standard deduction of course," says Cpt. Miller, referring to the amount the federal government will offer to families if they decide to forgo iteming, but he hopes the country comes up with another way to incentivize giving.

There are discussions in Congress to create a Universal charitable deduction, which Cpt. Miller says the Salvation Army might support.

In the meantime, if you plan to itemize your deductions for the fiscal 2017 year, you can still donate before the end of the year, while the benefit is still there.