CalNonprofits Articles

Tax Bill and CA nonprofitsWe kept hoping that Congress would put communities and people first in the tax reform bill, instead we were deeply upset with the bill that Congress approved today. As we’ve shared earlier, this bill severely pressures communities, while simultaneously reducing the resources we nonprofits have to serve them. It was also disheartening to see twelve representatives from California ignored the impact this will have on their constituents in order to toe the party line and vote for this bill

One provision in the bill that will impact nonprofits is the doubling of the standard deduction. Currently, about 30% of people itemize their taxes, and therefore receive a tax benefit from their charitable contributions. However, under the new tax bill, experts expect that an estimated 95% of Americans will opt for the standard deduction instead of itemizing – meaning the tax deductibility of donations will only affect the taxes of 5% of Americans rather than 30%. While we are hopeful that people won’t reduce their donations, there are estimates that the amount of charitable contributions may shrink anywhere from $13 billion to $20 billion annually.

Nonprofits Also Need to Focus on the Upcoming Federal Budget

We are increasingly wary about what this bill foreshadows for 2018. Speaker Ryan has hinted that he intends to use the deficit (which will grow as a result of these tax breaks for corporations and the wealthiest in America) as a reason to try and cut the federal budget for programs for seniors, working families, and children. We’ve begun calling attention to this issue in the media and we will be watching this process carefully to keep you informed.

The California Legislature Steps Up

When Donald Trump was elected, the leaders of the California legislature promised to ensure that California remained a “Refuge of Justice.” State Assembly Members and Senators are already approaching us about how the state could fill in the gaps created by this tax bill. For example, there is a new ballot measure in the works to change Prop 13’s restrictions on corporate-owned property tax increases. The state also has a budget surplus that could be used to fill some of the gaps, and there are conversations about how the state’s tax laws could be changed to incentivize charitable giving that might not otherwise happen because of the federal changes. We will work to ensure that the needs of California nonprofits, and the communities you serve, are front and center in these conversations.

Action step

Now would be a good time to connect with your elected officials to share concerns you may have either about this tax bill or about the upcoming federal budget and the impacts on your community and on your organization. They are probably at home in their districts, making it easy to visit. Call and simply say you want to let them know what services you provide to their constituents so that their district office can refer people to you. And that you'd like to learn more about his or her views on how California will fare this coming year. We will be in touch in January, but we wanted to share this update with you and let you know that this is an issue we are concerned about and will continue to monitor closely.

Ultimately, we see this as a wake-up call for nonprofits that we will have to continue standing up and speaking out, perhaps even louder, in 2018.


+1 # D.H. 2017-12-21 14:36
A good friend and long-time donor called to let me know his year-end gift was in the mail. As we chatted, he expressed his concern about the new tax law and its impact on our organization.

“I ran the numbers,” he said. “And after this year I will have no tax incentive to keep giving.” He hastened to add that he WILL continue to support us because he believes in our work, but he wondered how many donors we and other organizations might lose next year, when the charitable giving deduction disappears for all but the wealthiest one percent. How many middle class people like him won’t increase their giving; or won’t start giving?
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