Fifteen people received forms this week from The Children’s Center Inc. All of them donors to the nonprofit, which operates programs for runaways and homeless young people.
The forms will allow the donors to complete their 2017 tax returns, and note their donations to The Children’s Center as itemized deductions.
It’s a typical routine every year.
“We do get a lot of individual gifts,” said James “Terry” Keel, the president and the CEO of The Children’s Center. “Every once in a while, you get a very large donation, and if you get a very large donation, there’s a tax incentive.”
But under a proposed tax plan making its way through Congress, the group could give out fewer of those forms next year because, some worry, there will be less incentive to make donations.
The concern comes down to how tax reform bills would change the rules about itemized deductions.
There are two tax bills in Washington D.C. — one in the House of Representatives and one in the Senate.
There are differences in the bills, but one of the similar things in the proposal is to nearly double the standard deduction. The deduction determines how much money is exempt from taxes. Increasing it will mean that many people get to keep more of the money that they earn.
It could mean that fewer people will use itemized deductions — that is, accounting for individual special tax breaks — in order to get a maximum return.
Earlier this month, the nonpartisan Tax Policy Center estimated that if the standard deduction provision is increased, as few as 5 percent of taxpayers will continue using itemized deductions, down from about 30 percent under the current rules.
The concern among charitable groups is, if fewer people use itemized deductions, they will see less of a point to give to charities.
How that would affect individual local nonprofits varies based on their business models.
The Galveston Historical Foundation, one of the most well-known nonprofits in the county, generates much of its revenue through events and attractions, said Executive Director Dwayne Jones. But the group still brings in hundreds of thousands of dollars in donations, too.
Some people may have personal financial reasons for donating, but many donate because they believe in the foundation’s mission to preserve historical properties, he said.
“I do think people will still be motivated to support entities that they believe in,” he said.
Some of the largest nonprofit groups in the country have pushed back against the GOP tax plan, including the United Way, which has directed its members to contact Congress about putting a “universal deduction” for charitable giving back in the bill.
Chris Delesandri, the executive director of the United Way of the Mainland, said he’d heard of the proposed changes through the national arm of the United Way, but wasn’t sure whether the changes would affect local giving much.
“I’m sure it’s going to have some sort of effect, what it is, I don’t know,” Delesandri said.
The House of Representatives approved its version of the tax bill with a mostly party line vote. U.S. Rep. Randy Weber, of Friendswood, voted in favor of the plan.
The Senate is scheduled to vote on its version of the tax plan after Thanksgiving. If it passes the Senate, the two chambers would meet to reconcile the two bills and create a final tax plan.
The White House has urged Congress to pass a new tax plan in December, a request President Donald Trump reiterated on Tuesday before a meeting with his Cabinet secretaries.
“We’re going to give the American people a huge tax cut for Christmas — hopefully that will be a great big, beautiful Christmas present,” Trump said.