RACINE — Nonprofits throughout Racine County are preparing for how they’ll maintain contribution levels as a new tax law takes effect that some worry will cause donations to decline.
The new federal law increased the size of the standard deduction to $12,000 for individuals and $24,000 for married couples filing jointly in the next tax year. That change, among others in the law, is anticipated to decrease the number of people who itemize deductions on their tax returns and increase the cost of charitable giving. With those expectations in mind, local nonprofits are increasing their engagement with donors to ensure they sustain their funding and continue to serve people in need.
Rodney Prunty, the president of United Way of Racine County, said his organization is concerned at both the local and national levels about how this new tax law could affect its funding. United Way works with local organizations to promote health, education and financial stability, he said. A decrease in giving to United Way, Prunty said, means a decrease in giving by United Way to other nonprofits.
“Any impact that we see because of this would also affect our nonprofit partners through the funding they get from us,” Prunty said.
The organization is not opposed to the larger standard deduction in and of itself, he said, but he’s concerned about how it might affect donations. About 80 percent of its budget comes from local workplace campaigns, Prunty said.
His organization has been talking with higher level donors about considering increases to their gifts because of the change, he said.
Giving to give
President Donald Trump signed the Tax Cuts and Jobs Act into law in December. The Tax Policy Center estimates the new law will reduce charitable contributions by about 5 percent.
Donations may be smaller because giving could be more expensive under the law. Still, Prunty said he expects people will give.
“I think most people give for altruistic reasons,” he said.
Jason Meekma, a Racine alderman who is the executive director of the nonprofit Focus on Community, shared a similar sentiment. The organization works with youth and families on substance abuse prevention and relies on donations for about a quarter of its annual budget. He said he views the anticipation as more of a speed bump that will be overcome by people’s motivation to give because they support Focus’ cause.
“People care and, because people care, we’re able to depend on them,” he said. “I’m hopeful and confident that people might even give a little bit more now, and they’ll see that there is a need.”
Meekma said Focus has not developed any specific plans to combat the potential donor drop-off, but it will increase its engagement with contributors to keep them apprised of the organization’s work.
The new law has raised some concerns at Big Brothers Big Sisters of Racine and Kenosha Counties, said Ashleigh Henrichs, the organization’s executive director. The organization has been keeping an eye on the change as donations make up about 30 percent of its budget, she said.
Big Brothers Big Sisters, which provides mentoring for kids, may see some impact and is always looking for new ways to increase revenue, Henrichs said. One change the organization is making is to emphasize monthly donations instead of end-of-year contributions.
That will provide a steady flow of income, she said.
“We wanted to be proactive,” said Henrichs.