If you’re like many Americans, you’re just finishing the tedious task of filing your annual tax return. And with the upcoming changes to the 2018 tax law, you may be wondering if there will be any tax benefit to your charitable giving next year.

At Hutchinson Community Foundation, we are getting this exact question from donors. Nonprofits, too, are wondering whether they should expect a huge drop in donations starting this year. With so much confusion about philanthropy and the new tax bill, it’s worthwhile to take a closer look at some of the bigger issues. Keep in mind, too, that most of the changes go into effect in 2018, so the return you’re completing now for 2017 will be similar to previous years.


Will I still be able to claim my donations? Yes, for 2018 you will still be able to deduct your charitable donations. That said, next year some taxpayers will find greater advantage in choosing the standard deduction over itemizing because the new tax law has essentially doubled the standard deduction for most Americans.

Will charities see a dramatic decline in donations? It’s hard to tell, but about two-thirds of all Americans contribute to charity and at least half of them do so without itemizing their donations. We are a generous community and people often give when a charity touches their heart or when they see a nonprofit doing good things for the world, regardless of tax benefit.

Even if you don’t think you’ll itemize on your tax return next year, there are still some strategies that may help your tax bill so that you don’t end up paying more than necessary. Talk to your accountant now to see if you should use any of these strategies this year.


IRA rollover contributions: If you are age 70½ or older and have an IRA, consider donating to your favorite charity(s) directly from your IRA. This is a fantastic strategy whether you are itemizing or not because if you donate directly from your IRA to charity, the money is never added to your income, yielding a much better bottom line on your tax return. Best of all, donations from your IRA “count” toward your required minimum distribution — great news if you don’t need your IRA for income right now but are forced to take it because of your age.

Gifts of stock or real estate: If you are blessed to have a portfolio that includes a variety of resources, consider gifts of appreciated assets, such as securities or property. Even if you don’t itemize, donating your appreciated assets may help you avoid the capital gains tax — which, incidentally, did not decrease with the new tax law. Ask your accountant if you’d benefit from shifting some of your philanthropy from cash gifts to gifts of stock or real estate.

Gift bundling: Perhaps you contribute each year to charity, and perhaps your budget is somewhat flexible. Consider bundling the donations you might have made over several years into one gift in one year to a donor-advised fund, one in which individuals, families and corporations may suggest grants to their favorite charitable organizations. The new tax bill gives you greater accommodation to do this, allowing you to deduct up to 60 percent of your adjusted gross income for cash gifts, an increase from last year. If you can combine your gifts into one year, they could qualify for itemization and you can use your new donor-advised fund to benefit your favorite charities for years to come.

There’s one last major change to the tax law that may affect your philanthropy: doubling of the estate tax exemption from $5.6 million per person to $11.2 million per person. Additionally, the generation-skipping transfer tax has increased as has the gift tax annual exclusion.

If this could affect your estate, be sure to meet with your advisers to discuss your plans accordingly. And if you’re redoing your plans, now’s the time to consider how a reduced tax bill could enable your family to make a planned gift that will help your community forever and establish your philanthropic legacy.

Aubrey Abbott Patterson is president and CEO of Hutchinson Community Foundation. Email: aubrey@hutchcf.org.