Tax changes prompted December giving surge

Many Jewish organizations in Baltimore and Washington have reported increases in the amount of charitable contributions at the end of 2017 due to changes in the new tax law. pixabay.

Jewish donors in Washington and Baltimore are reacting to the new federal tax law with their dollars, and that has meant a December surge in donations for area Jewish nonprofit organizations.

Whether they upped 2017 charitable gifts to cover future years or prepaid 2018 synagogue dues, donors anticipated receiving a smaller tax deduction under the new law. They reacted by seeking to maximize their charitable giving deductions for 2017 tax year, said Jewish organizational heads interviewed for this article.

The result is that the organizations said they received larger-than-usual donation amounts during the last week and a half of 2017.

 The Edlavitch DC Jewish Community Center in Washington experienced a 15 percent increase in the number of gifts that were made in December 2017 compared to December 2016, said Adina Kanefield, deputy executive director.

“We did receive several calls from donors who expedited the contributions they would usually make in the spring, and additionally we had a handful of donors prepay their gifts that they would anticipate making over the next couple of years,” she said.

There were similar conversations at the Jewish Coalition for Domestic Abuse. Development director Hannah Zollman said that the organization had not finished totaling the 2017 donations, but it had received more gifts in the last week of 2017 than the last week of any previous year.

“We have a donor who called and wanted to find out what gift she had made the last three years,” she said. “She wanted to give her 2017 and 2018 gifts in 2017. Some people have said, ‘We don’t know what next year holds.’”

The law, signed by President Donald Trump on Dec. 22, makes a number of changes that are expected to slash the number of households in the United States itemizing deductions for charitable giving from 37 million to 16 million, according to the Washington-based Tax Policy Center. This is based on the decrease in incentives for charitable giving that stem from changes in the law.

Those changes include the lowering of individual income tax rates and the increase in the standard deduction to $12,000 for singles and $24,000 for married couples. This is expected to have the largest impact on donors who give between $1,000 and $10,000 a year and are more likely to use the standard deduction than itemize starting with their returns for the 2018 tax year, according to Gail Perry Fired-Up Fundraising, a consulting firm in Chapel Hill, N.C.

Kanefield said the DCJCC’s increase in donations might have been greater had the tax law been adopted earlier in the year. That would have given people more time to think about prepaying their future donations.

“Because the changes are so late in the year, people have already made their philanthropic decisions, or they were on vacation,” she said.

Kanefield said such a major change to the tax code will have financial consequences for charities across the board, as they evaluate how to best bring in gifts in the future.

“I think that the changes, now that we have a chance to look at them in the philanthropic community, could have great potential ramifications and that all of us that are working with donors should look into how this might change the constellation of giving opportunities,” she said.

Paying 2018 synagogue dues in advance was another way people took advantage of the 2017 tax deduction benefits because they may not be itemizing in the future, said Ricki Gerger, the president of Adas Israel Congregation in Washington. Gerger said the timing of people wanting to pay their dues in advance coincided directly with the tax law’s passage.

“We haven’t seen people wanting to prepay their dues in the past,” she said. “People were looking for ways to maximize their deductions in 2017, and we saw it as an opportunity to help our members accomplish what they wanted.”

Gerger added that while the Conservative congregation typically sees a rise in donations toward the end of the year, many donors last year requested to accelerate their pledge for 2018.

An alternative step taken by donors to make their last-minute 2017 donations was through a donor-advised fund — a separate account the donor creates with the intent of contributing to multiple charities over a multi-year period. Both the Jewish Federation of Greater Washington and The Associated: Jewish Community Federation of Baltimore worked with donors in establishing donor-advised funds in 2017. The funds are separate accounts for future charitable gifts.

The Greater Washington Federation declined to comment on this year’s gifts.

But Associated President and CEO Marc Terrill said his agency saw an increase in donations after the tax law passed.

“We did see people that made contributions above and beyond what they made in the past in order to be tax-wise,” Terrill said. “In some cases, people gave more for the current year or more for multiple years.”

Terrill said giving in December is traditionally higher for The Associated because of the number of people who typically give at the last minute. He was careful not to overstate the impact of the new tax law, estimating that only two dozen donors specifically cited the tax law as the reason for the increase in their gifts.

“When you have 10,000 donors, it was more the exception than the rule,” he said. “So I don’t want to overemphasize it. But it would be a safe, educated guess to think that it had something to do with the tax changes.”

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