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New Tax Overhaul Law Has Serious Implications For Nonprofits

NOEL KING, HOST:

For many Americans, giving to charity is kind of like a holiday tradition. In December, you'll hear reminders - make your tax-deductible donation before the end of the year. But this new tax law has some charities really worried. The new tax bill increases the standard deduction, and so fewer middle-class Americans will likely benefit from listing individual deductions like charitable donations on their tax returns. I asked Larry Lieberman, the chief operating officer of Charity Navigator, why this is such a big deal for nonprofits.

LARRY LIEBERMAN: In 1917, the U.S. government created an opportunity for Americans to take a tax deduction for donations to charitable organizations. It was straightforward, and that's existed since that time. The only way to take advantage of this deduction is to file an itemized tax return. So what we're hearing now is that the number of Americans who will be filing itemized returns will be going down.

KING: Ah, the standard deduction goes up, fewer people need to itemize their returns, fewer people toward the end of the year are looking to write in the $500 that they give to the Salvation Army or to Oxfam or to any charity. Is that it?

LIEBERMAN: That's correct. And the estimates are that as many as 30 million more Americans will choose not to itemize their tax returns.

KING: When you talk to charities about their concerns that people might give less, I wonder, is it certain types of charities that worry they'll be affected? Is it, you know, the food pantry versus the opera or across the board, are you seeing concern?

LIEBERMAN: There's very much a skew in the concern. We're hearing much more from local organizations and community-based organizations and even the United Way, which is so active locally. These are organizations that receive a disproportionate amount of giving from middle-income Americans. And the effects of the tax reform on those people is really unpredictable.

KING: Can you tell me, what are they worried about? What are you hearing from people, specifically?

LIEBERMAN: For all the charities that we work with, there's confusion. And frankly, these changes are complicated. Right now, organizations are telling us that they have calls from donors asking if they should not give until next year and just as many calls from donors saying, I should be giving now rather than next year, is that correct? Charities have set up their systems - and most of them are extraordinarily lean and mean organizations - so that they understand the cycles and behaviors of the donations that come in, right? And there's no denying that Giving Tuesday is an extraordinary day, and December 30 and 31 are extraordinary days. They're deadlines that people have etched into their mind to make charitable donations, and if that incentive is minimized, organizations are concerned.

KING: Larry Lieberman is the chief operating officer of Charity Navigator. Larry, thank you so much for joining us.

LIEBERMAN: Thank you.

(SOUNDBITE OF ODDISEE'S "OUT AT NIGHT") Transcript provided by NPR, Copyright NPR.