Record-Eagle/Tessa LightyJacob Burley hops on his bike to ride around the Norte Clubhouse in Traverse City on Friday. Local nonprofits are concerned a new tax law could affect charitable donations.

”+ ”+ ”; Local nonprofits are concerned a new tax law could affect charitable donations.

TRAVERSE CITY a Nonprofit organizations across the region are bracing for a drop in charitable donations as the Tax Cuts and Jobs Act, signed into law on Dec. 22, goes into effect for 2018.

The concern is that the new tax code will have a negative impact, said Joan Moore, executive director of the Leelanau Township Community Foundation.

“Hopefully, people will continue to support their favorite causes because it feels good and it’s the right thing to do, not because it’s going to give them a tax break,” Moore said.

The biggest difference is that an increase in the standard deduction has taken away the incentive to make charitable donations, said Scott Verhage, a Certified Public Accountant and tax manager of Kindlinger & Company.

The standard deduction for a single filer has been increased from $6,350 to $12,000, and for a married couple from $12,700 to $24,000. That will likely translate to fewer people itemizing their deductions, which is where those donations can decrease taxable income.

A taxpayer who does not itemize receives no such benefit from donations, Verhage said.

aNot a lot of people are going to be over that amount so thereas not the tax incentive to contribute to charity,a he said.

The majority of donations received by the Leelanau Foundation are for $100 or less, Moore said. It was founded in 2013 by husband and wife Ty and Johanna Schmidt.

Norte could be affected by the new laws as fewer people will likely itemize their deductions, said Ty Schmidt, executive director.

“I don’t know if that will affect us,” Schmidt said. Of that, $14.2 billion will be due to the larger standard deductions and $3 billion will be due to other changes in the law, the study said.

Becky Ewing, executive director of Rotary Charities, says that’s a “wow” number, especially when you consider that individual giving is about 80 percent of a nonprofit’s revenue stream.

Rotary Charities, which has operated on endowed assets from oil and gas revenues since the late 1970s, does not receive donations. all of which improve the quality of life.”

Another area that has changed for 2018 is in estate and gift taxes, where the threshold for having to pay the tax has risen from about $5.5 million to $11.2 million.

The estate tax, also known as the death tax, is based on the overall value of an estate after deductions are applied. In the past, when a person died and had an estate worth more than $5.5 million, anything over that mark would be taxed at a rate of 55 percent, so bequests were often made to charities.

aBecause the tax rate is so high it makes sense to give the money away rather than give it to the government,a Verhage said.

The concern is that people may opt to give the money to their heirs rather than to a charity.

Amy Beyer, director of the Conservation Resource Alliance, said estate bequests are more about trust and the long-term relationship a person has had with the organization and less about tax codes.

“The one thing that we always remember is that people are driven by passion to make gifts, especially those end-of-life gifts,” Beyer said. “To me you either love CRS or you don’t.”

The nonprofit works to enhance the beauty and habitat value of the region through sensible land stewardship.

“If we felt the impact (of tax law changes) it would be much more slowly and over time,” Beyer said.

Other changes Verhage said will not likely affect many local nonprofits are in the Unrelated Business Income Tax, which is levied on related business taxable income of most nonprofits.

The changes will only affect those organizations that run separate, unrelated businesses that are profitable, and do not include things such as a fundraiser golf outing, he said.

Fringe benefits offered by some companies, such as paying for on-site gym memberships or parking and commuting expenses for employees, may now be taxed.