For Lynn O’Marra, Blum, Shapiro & Co. PC tax principal, 2018 stands out in her nearly 25-year tenure in the industry as a memorably tumultuous year.
While 1986 had a similar feel, 2018, she said, was “a monumental year for tax accountants. … There are really expansive changes” that continue to roll out from the IRS every day.
O’Marra, who brings nearly a quarter-century of experience analyzing tax trends to the table, said she faced hurdles on many fronts last year, but the one aspect of her work to remain mostly unscathed by the 2017 tax-regulations overhaul was charitable giving.
“By and large, I’m seeing pretty healthy giving this year,” she said, adding the feedback from her clients, and her own analysis of the environment, is that the new regulations are not perceived as “major deterrents” to charitable giving.
Thirteen months after the $1.5 trillion tax cut championed by Republicans and President Donald Trump took effect, accountants are reporting a less-drastic fallout than was initially expected for charitable giving. Yet, most agree it’s still too soon to detail the full impact.
O’Marra knows a complete impact analysis isn’t possible until tax returns begin to trickle in prior to the April deadline.
Local accountants also concur what negative impact may trickle down to the general public will play a role in individuals’ charitable giving, rather than corporate actions, and can be mitigated through strategic planning. They believe corporate giving will continue as it did prior to 2018.
Accountants across the state, including the Rhode Island Society of Certified Public Accountants, recognize and emphasize the idea that charitable giving is an emotional act – and not 100 percent driven by tax benefits.
“Folks [are] definitely still supportive of organizations that are near and dear to their hearts,” she said.
Similar to O’Marra, there’s nothing new to report on the individual charitable giving front for Paul Oliveira, director of tax services at Kahn, Litwin, Renza & Co. Ltd. in Providence. In fact, he said, “The clients we work with are giving as much as they have in the past.”
Charity reported by Rhode Island accountants is somewhat reflected nationally.
Twelve-year-old charitable-giving tracker The Fundraising Effectiveness Project, supported by the Association of Fundraising Professionals and the Urban Institute’s Center on Nonprofits and Philanthropy, compared January through September of 2018 to the 12 months of 2017 and found mixed results.
While the data shows the amount donated between January and September of 2018 represents more than two-thirds of the total donated in 2017 (66.7 percent), just 65.2 percent of 2017’s total donor count gave to charity during the first nine months of last year.
‘Folks [are] ... still supportive of organizations that are near and dear to their hearts.’
LYNN O’MARRA, Blum, Shapiro & Co. PC tax principal
In a statement, RISCPA spokesperson Donna Perry said the organization’s members are similarly reporting “less of an impact … [on] charitable giving than what was originally forecast” when the regulations were first publicized.
Some RISCPA members operating in the nonprofit sector even reported no “negative impact on giving so far this year,” according to Perry.
Yes, awareness of the new tax regulations and their implication for charitable giving was up in November, said O’Marra, but because of their recency, she and many of her colleagues advised individual clients to alter their giving habits so they can continue to financially support the organizations that mean so much to them.
One suggestion from Oliveira, for clients aged 70-and-a-half-plus, is a direct donation from their retirement fund to the nonprofit of their choice. Donations of up to $100,000 can be made in this fashion, he said, and be tax-beneficial.
Additionally, there’s something called bunching.
“Instead of giving smaller amounts every year,” he said, individuals should donate the sum of what they would have donated over a few years all at once and then skip their donations for the remainder of the years represented in the donation total.
Therein, he said, “At least the year in which you gave, you probably get some tax benefit.”
Similar to bunching, said Joanna Powell, tax director at CBIZ & MHM in Providence, is depositing the desired annual donation total in the form of appreciated securities into a donor-advised fund.
It’s “perfect,” she said, because “You get the deduction this year and can decide where it goes over the life of the fund.”
While “bunching is a focus for a lot of folks,” added O’Marra, “I’m also seeing a lot more estate planning, [in which] people are really starting to give a lot more thought to the overall picture of their charitable giving.”
In line with Powell and O’Marra, Oliveira says charitable giving has not had the drastic downturn some expected it might have, given the tax changes – nor has it seen a banner year.
“I don’t think we’re seeing any big differences this year” in local charitable giving, but, he said, “Frankly, it’s still early.”
Emily Gowdey-Backus is a staff writer for PBN. You can follow her on Twitter @FlashGowdey or contact her via email, Gowdey-backus@PBN.com.
