Recent changes in federal tax laws designed to save taxpayers money are costing Arizona nonprofit organizations money. Lots of money. And, potentially, lots of jobs.
A report by the Seidman Research Institute at the W.P. Carey School of Business at Arizona State University estimates that charitable giving in Arizona will drop by an astonishing $272.7 million every year following passage of the Tax Cuts and Job Act.
As a result, many Arizona taxpayers will not itemize their returns because the new law nearly doubles the federal standard deduction offered to both single and married taxpayers. That means there is no financial incentive to donate to nonprofit organizations because taxpayers won't be able to claim—and won't need—the deduction.
But nonprofit organizations doing great work in communities throughout Arizona do.
The Seidman report projects the total economic impact will include a $775.4 million reduction in GDP by the state, $493.5 million less in labor income and thousands of jobs could be lost. That would mean less funding for private food banks, homeless or domestic violence shelters, childcare, job training, and educational programming by arts and cultural organizations.
What can we do as concerned citizens, taxpayers and supporters of the positive impact of nonprofit organizations, their staff, volunteers and boards to identify and meet important community needs?
To start, a coalition of advocates for the nonprofit community is proposing legislation to change Arizona's income tax law to allow individuals to deduct donations to nonprofits even if they are not itemizing their returns.
Under HB 2359, standard deductions would be increased by the amount of charitable deductions that would have been allowed if the tax returns were itemized.
What this means is that if a taxpayer decides to donate $100 each to five qualifying nonprofit agencies in Arizona, they would be able to deduct $500 over and above the standard deductions.
We certainly can't predict whether that proposed legislation will make its way to a floor vote, and we can't afford to wait.
So, our goal is to encourage taxpayers to look beyond tax season to the entire calendar because nonprofit organizations don't confine their work to a specific time of year and to think about the impact you can have in changing lives and saving lives by making donations of any size to organizations doing this good work.
While we would love to see those generous contributions pay dividends to donors in the form of a tax deduction, we cannot overstate the critical importance every single dollar means to the struggling men, women and children who benefit from services, resources and advocacy that social service agencies provide and to the impact on our quality of life offered by arts and cultural organizations.
One option is to participate in Arizona Gives Day (www.arizonagives.org), a 24-hour online fund-raising event on April 2 that has raised more than $13.4 million since 2013. Another is to visit the Alliance of Arizona Nonprofit website at www.arizonanonprofits.org where you can search a database of qualified, deserving nonprofits serving Arizona communities.
A third option is to contact your elected representatives and encourage them to protect charitable giving by supporting HB 2359. You can find more information at www.azleg.gov.
The bottom line is that we, as individuals and as a community, must do what we can to help those in need and those who so selflessly serve them.
Kristen Merrifield is Chief Executive Officer of the Alliance of Arizona Nonprofits (www.arizonanonprofits.org). She can be reached at (602) 279-2966. Laurie Liles is President and Chief Executive Officer of the Arizona Grantmakers Forum (www.azgrantmakers.org). She can be reached at (602) 977-2756.
