Nonprofits leery of tax overhaul

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How much the new tax law will affect nonprofits may depend on what kind of work they do. (Image courtesy flickr.com)

The GOP tax overhaul is giving some nonprofit organizations holiday heartburn. The reason: itemization. More specifically, it’s the lack thereof.

Right now, taxpayers can write off charitable donations if they itemize their tax deductions, writes Aaron Moselle in Philadelphia Business Journal. 

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Under the new law — parts of which go into effect Monday — the standard deduction is nearly doubled to $12,000 for individuals and $24,000 for married couples. That increase is meant to give most people a tax cut, at least initially.

But it means fewer people will itemize their deductions. And nonprofits fear that will cause donations to dip, particularly from people in the middle class, who historically have itemized more deductions than their upper-class counterparts.

How much the new tax law will affect nonprofits may depend on what kind of work they do.

Organizations that provide human services could take the hardest hit because they rely the most on private donations and limited public funds.

“A lot of the organizations that provide services to the most vulnerable are already financially fragile, so in this season of giving, it’s important to make sure that we continue our support for them and call attention to the work that they do,” said Pedro Ramos, president of the Philadelphia Foundation.

For more details on how the new tax plan is affecting nonprofits, go to whyy.org.

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