Nonprofits organizations could face serious cutbacks in federal support and a drop in charitable giving if President-elect Donald Trump’s policy proposals are adopted, according to a report by The Chronicle of Philanthropy.
A pre-election analysis by the Tax Policy Center estimated that Trump’s plan would reduce individual giving by 4.5% to 9%, or between $14 billion and $26 billion in 2017.
In 2015, American donors contributed an estimated $373 billion to charity, according to Giving USA.
Moreover, any near-term market declines could undermine donors’ confidence with negative consequences for year-end giving, Patrick Rooney, who teaches at Indiana University’s Lilly Family School of Philanthropy, told The Chronicle.
As well, if Trump should take action on campaign pledges to impose tariffs on imports and scrap trade agreements, that could disrupt the economy and hurt charitable giving, Rooney said.
According to The Chronicle, many analysts expect Trump and Capitol Hill lawmakers to propose a major tax overhaul, probably including big tax cuts. Some proposals may also seek to limit incentives for giving and spending cuts to social-service spending.
Trump’s tax plan seeks a cap for write-offs, including for charitable donations, of $100,000 for single people and $200,000 for married people, the Tax Policy Center said.
The Chronicle reported that Trump’s tax plan calls for 1% annual reductions in federal spending, excluding military and entitlement programs—some $800 billion over 10 years. In the event of passage, colleges, human-service groups and healthcare organizations, which typically receive government grants and contracts, could see reductions.
Together, social-service spending cuts and caps on deduction “would be disastrous” for nonprofits, said Steven Taylor, United Way Worldwide’s counsel for public policy.
In the short term, big tax cuts for rich households would likely result in reduced giving because they would lessen the value of charitable tax deductions, experts said. Longer term, some suggested, tax cuts would leave wealthy donors with more money to give—Rooney was doubtful that giving would increase.
The Chronicle report said it was uncertain whether Trump would continue to call for an end to the law that prevents nonprofit groups from engaging in partisan politics, the so-called Johnson Amendment.
Republican lawmakers recently introduced a bill to end the Johnson Amendment.
Roger Colinvaux, a nonprofit tax law specialist at Catholic University of America, expressed concern to The Chronicle that ending the law could lead many charities into mission drift, and result in a proliferation in ones with purely political aims.
Some tax experts wondered whether Congress would investigate Trump’s private foundation. During the campaign, it was accused of using the charity’s funds to benefit his businesses and taking credit for donations from the organization without any contributions having been made for several years.
Hillary Clinton also came in for criticism, accused of favoring large foreign donors to the Clinton Foundation with access and favors during her tenure as secretary of state.
Any investigations into Trump’s foundation could cast a shadow over all charitable organizations, Nancy Berlin, policy director at the California Association of Nonprofits, told The Chronicle.
However, Berlin said, she was mainly concerned that in the wake of Trump’s election, nonprofits will find it harder to collaborate with the federal government.
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