December 19th, 2017
This week, the House and Senate plan to vote on a final comprehensive tax reform package that will have immediate implications for choruses and all nonprofits.
Congress and the White House aim to have the final bill signed into law by the end of this week. The League of American Orchestras, our partners in the Performing Arts Alliance, has created a helpful summary of key policy items that could affect performing arts organizations. Highlights include:
- Giving expected to decline among growing ranks of non-itemizers: While the charitable deduction is preserved for those who itemize their tax returns, the number of itemizers is expected to fall dramatically as the standard deduction is nearly doubled under the tax reform plan. Charitable giving has been projected to decline by up to $13 billion per year if only 5% of taxpayers itemize their returns, prompting advocates to seek a "universal charitable deduction" available to non-itemizers.
- Johnson Amendment still protects the non-partisanship of 501(c)(3)s: What started as an effort to allow more political speech by churches was expanded to impact all 501(c)(3) organizations, as the House tax bill would have allowed nonprofits supported by tax-deductible contributions to endorse candidates for office, removing the protection in law (called the Johnson Amendment) that prevents nonprofits from being pressured into partisan activity. The Senate bill did not include such a provision, and the Johnson Amendment is preserved in the current tax reform bill.
- Artist Fair Market Deduction omitted: The bill does not include a provision long-sought by arts advocates that would allow composers and other artists to take a fair market value deduction when contributing their works to charitable collecting institutions
What can you do?
- Keep speaking up on the universal charitable deduction. Many provisions in the tax package expire at the end of the 2025 tax year, and a number of key tax topics didn't fit into the bill. Congress is expected to take up legislative proposals in 2018 that may relate to tax reform. Your voice can help to ensure that Congress knows how charitable giving will be harmed in the tax reform proposals, and you can encourage elected officials to support a solution. The Perfoming Arts Alliance online campaign provides a sample message that you can (and should!) customize very easily.
- Consider how to communicate with your donors. Some donors may be incentivized to give more now, before tax policies change.
- Start thinking now about how to track the impact of reform. While the tax reform bill is not yet law, it's never too soon to start thinking strategically about next steps. Future improvements to tax policy will depend on solid data about the impact of proposed reforms. Start considering how your chorus will monitor any increased costs and any changes to charitable donations.
Chorus America will track the impact of these tax policies on the choral field. If you have any thoughts to share or are affected by these tax changes, please keep us updated.