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The Impact of New Tax Laws on the Local Nonprofit Sector

There’s no question that the 2018 tax reform has been a hot topic of conversation, and often, a source of concern for the nonprofit sector.  Organizations have been asking: how can we prepare, what can we anticipate, and how should we adjust our fundraising plan?

Over the last several months in Greater Richmond, nonprofits have gathered for workshops, community conversations and discussions to learn from experts and one another about how they can strategically navigate these changes, while continuing their mission-driven work.

This July, the Community Foundation surveyed nonprofit leaders to better understand the implications of the new tax laws on the local sector to monitor trends and offer insight.

The 75 out of 441 local nonprofits that completed the survey (17%) represented various levels of operating budgets – from under $250,000 to over $5 million.

Here are the survey response highlights:

  • 44% of respondents reported that they relied on individual donor support for over a quarter of their revenue in 2017.
  • 67% of respondents said that individual donations have increased the first half of 2018 from this same time frame last year.
  • Most respondents indicated funds from other sources (i.e. government funds, foundations, earned income) are also on the rise the first half of 2018, compared to the first half of 2017
  • Despite the overall positive trend in individual donor giving this year, 35% of respondents didn’t feel confident that individual donors will continue to give at their current levels regardless of changes in both tax laws overall and the charitable deduction

One respondent in the survey said, “We are concerned because our typical donor is not wealthy. We have a grassroots base of donors, and the average donation is small. The new tax law removes the financial incentive for most of our donors, to give. We hope that they will continue to support, out of commitment to our mission, regardless. But these are uncertain times. Thanks for your concern!”

It’s important to note, many donors who have typically itemized their charitable contributions may not fully see the impact of the new tax laws until they file their 2018 taxes early next year. Therefore, we may not see significant changes in charitable giving until 2019.

Thank you to those who took the time to respond to the survey.  The Community Foundation will repeat this survey every 6 months for 3 years to collect reliable data (the next survey will go out in February).

For more resources related to this topic and others, you can take courses, join in conversations and download presentations and curated content in the Learning Center.

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