Going into effect earlier this year, the Tax Cuts & Jobs Act (TCJA) has donors, nonprofits, and the media speculating on how tax changes will impact philanthropy. Why? Under the new tax law, the standard deduction, which includes deductions for charitable giving, was doubled. Experts project this change will remove tax incentives for ~90% of donors.
Despite the uncertainty, we know that donor and nonprofit relationships are not simply transactional. Donors give with their head and their heart, often leading with their heart to support causes they care about. So, in the wake of the new tax law, what is your role as a donor and nonprofit supporter? How can you help causes you care about stay around for years to come? Here are our tips for year-end giving under the new tax law.
1) Become Familiar with the Minnesota Charitable Deduction
Although the new tax law removed tax incentives for many, Minnesota taxpayers can still receive a deduction on their state return. Here’s how- Minnesota taxpayers who do not itemize deductions on their federal income tax return, will still be eligible to take a deduction for charitable contributions on their state return. Minnesota’s Charitable Deduction provides a 50% tax deduction for total charitable contributions over $500. Contributions to 501(c)(3) organizations in Minnesota and beyond, are eligible for the deduction, including public charities, churches, and faith organizations.
2) Getting Back to the WHY of Giving
As a donor, your dollars matter. When you support strong, healthy, and vibrant communities your dollars turn into so much more than a tax deduction. You’re strengthening neighborhoods, meeting community needs, and leading change. Now more than ever, that partnership and relationship matter. Although tax incentives and deductions might have determined ‘how’ you gave in the past, they were never really the ‘why’ behind your donations. This giving season, we encourage you to reflect on your own personal ‘why’ for giving, letting that motivate you to lean in, even further at times, to lend your voice and financial support this giving season.
3) Be a Smart Giver
Use our list of reviewed nonprofits to guide your giving decisions. Nonprofits included on our list have taken steps to align their internal policies, practices, and procedures to widely-accepted standards for nonprofit accountability and strength. These are nonprofits you can feel confident investing in.
Who are you supporting this giving season? Let us know at email@example.com for a chance to have your story highlighted online. Happy giving!