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January 31, 2023

Lori Butterworth, Dec. 14: Will the new tax law strangle charitable giving?

By LORI BUTTERWORTH

As we approach the end of the year, those of us who run local nonprofits are biting our nails reading predictions about how the proposed tax bill will affect charitable giving. It’s a reasonable concern as pundits forecast a $13 billion decrease in charitable donations and the demise of the nonprofit sector if either version of the current bill becomes law. The argument is that with the increase in the standard deduction under the tax bill, fewer people will itemize their deductions; therefore, they won’t give to charity.

But that notion doesn’t hold water if you look deeply at why most people give in the first place. What if the “experts” are making false assumptions about why we give to charity?

Research on philanthropy indicates that there are eight mechanisms that drive charitable giving: 1) awareness of need; 2) solicitation; 3) costs and benefits; 4) altruism; 5) reputation; 6) psychological benefits; 7) values; and 8) efficacy (Bekkers and Weipking, 2013).

Put simply: We give to charities that share our values, and feel gratified when we join with others who share those values. We give to organizations we trust to effectively make the changes we’d like to see in the world. Notice that giving for a tax deduction didn’t even make the list!

Regardless of tax policy, we will continue to give, and, most importantly, we must do as Theodore Roosevelt suggested, “Be practical as well as generous.”

With 20 years’ experience running nonprofits, I offer five suggestions for smart, impactful charitable giving:

1. Examine your heart. Decide what you care about and choose a nonprofit whose mission aligns with your values.

2. Give locally. If you want your donation to have an impact, there is a much higher likelihood that a local organization will use your donation efficiently and have a direct impact.

3. Ask questions. Don’t be afraid to call the organization with specific questions and expect honest answers.

4. Research. Go to www.guidestar.org, which reports on U.S. nonprofits. Find and review the IRS form 990 for your chosen nonprofit. Part 1 shows how much money they brought in and how much they spent. Part 3 shows the money spent on each program. Part 7 lists board members and the highest paid staff. Part 9e reveals how much was spent on professional fundraisers.

5. Give generously. When you find an organization that you trust, give generously and enjoy your generosity. The more you learn about the impact your gift is making, the more joy you’ll feel in giving. I recently heard a Rotarian challenge his club, saying, “If you’re not having fun giving, you’re not giving enough.”

Will the new tax law strangle charitable giving? Only if we let it. It’s our values that drive our giving, and those values run deeper than the tides of tax policy.

•••

Lori Butterworth is founder and executive director of Jacob’s Heart Children’s Cancer Support Services. Her opinions are her own and not necessarily those of the Pajaronian.

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