The days are short, but the lines are long at the Fisher’s Landing Goodwill, the Pacific Northwest’s busiest Goodwill store.
It is busier than ever despite the new increase in the standard tax deduction that could prevent some taxpayers from donating to charity in exchange for a tax break.
Donations are up 12 percent from this time last year at the east Vancouver store, which gets a lot of holiday decorations, clothes and toys as people donate old stuff to make room for gifts they received over the holidays.
Donation attendant John Finley said the drop-off sees close to 400 cars daily.
“We get a lot of nice stuff,” he said while sorting donations on a recent Wednesday. Finley recalls seeing a limited edition Jack Daniels set and a beautiful guitar (though those higher-end items go to Goodwill boutiques).
Did You Know?
• The tax code has allowed taxpayers to deduct charitable donations from their taxable income since 1917.
• Last year, charitable giving grew by more than 5 percent, according to Giving USA’s annual report on philanthropy. The report said individuals who itemize their taxes gave an estimated 5.6 percent more in 2017, and those who don’t itemize gave 3.3 percent more. Almost one-third of contributions went to religious groups and causes.
John Zimmerman dropped off donations at the Fisher’s Landing Goodwill and asked for a receipt. He said he’s itemized his taxes in the past and will continue to do so because his charitable donations, business expenses, mortgage interest and other deductions total enough to continue itemizing.
“I’ll still be able to take advantage of it, but not everyone will,” he said.
The standard deduction is now $12,000 for individuals and $24,000 for joint filers, up from $6,350 and $12,700 respectively. Most taxpayers already do not itemize their deductions, and the tax change means even fewer people will itemize.
The Tax Policy Center estimates that the Tax Cuts and Jobs Act will result in 8 percent of all households taking a charitable gift deduction in 2018, down from 21 percent last year. And, the share of middle-income taxpayers deducting their gifts will fall from 16 percent last year to 5 percent this year.
Greg Railsback, a certified public accountant and shareholder at Vancouver-based Railsback Johnson P.C., thinks the fears of the new tax law resulting in a major decline in charitable giving are overblown.
Clients at his tax-planning firm earn higher incomes, most between $200,000 and $1 million, and typically they give about 10 percent of their income to charity. Charitable giving reached an all-time high in 2017, according to Giving USA, which releases an annual report on philanthropy.
“Most of our clients don’t give to charity solely for the tax benefit,” Railsback said. “They’re motivated by things other than the tax savings.”
A few clients told him they’ll give more to charity as a result of their decreased tax liability. Railsback is not sure what taxpayers at lower-income brackets will do; it really depends on their individual situation.
For most every taxpayer, the change means a lower tax liability. Railsback has just two clients, extremely high earners in Oregon and California, who will pay slightly more in taxes for 2018.
Donation strategies
One strategy for certain taxpayers is called stacking or bunching, where a client holds their charitable contributions for a year and then gives twice the amount the next year, building up the tax deduction.
However, he said, people who donate a significant chunk of money every year to their favorite charity should give the organization a heads up if they’re going to employ this strategy.
If a supporter normally donates $10,000 and suddenly stops, “that can create a sense of panic,” Railsback said.
“In general, nonprofits do best with predictable, consistent revenue,” said Francisco Bueno, executive director of the Boys & Girls Clubs of Southwest Washington.
If the tax changes change that consistency, it will impact how nonprofits operate.
“I think it’s too early to tell,” he said. “It will be really interesting to see if it changes people’s giving habits moving forward.”
While his nonprofit has had discussions about the new tax law, it hasn’t seen any significant impact on giving. Boys & Girls Clubs donors primarily want to support youth in the community, he said. The tax benefit is secondary.
Janie Spurgeon, vice president of development at the Community Foundation for Southwest Washington, said taxpayers can maintain their giving habits by bunching and setting up a donor-advised fund. Taxpayers can put multiple years of charitable giving into the fund to maximize tax deductions, and then the Community Foundation will grant out that money over time.
Donors have to have the assets to set aside a lot of money at once, so this doesn’t work for everyone.
Spurgeon said many people aren’t aware of the tax change, but will realize it when they go to do their 2018 taxes. That means charitable giving habits could change in 2019.
“I think people will continue to be generous and step up to support the needs in Southwest Washington,” Spurgeon said.
Matt Edmonds, spokesman for the Clark County Food Bank, echoed her sentiment.
“People in our community donate because they want to help those in need. They don’t donate simply because they want a tax write-off,” he said.
While there’s been “lots of gloom and doom” about the negative impact of the new tax law, Edmonds said, the food bank, one of the larger nonprofits in town, hasn’t seen any negative impact.
“I think that speaks to the tremendous generosity of the community we live in,” he said.
According to Independent Sector, a national group of nonprofit members, Washingtonians give $4.4 billion to charity each year, representing 3.08 percent of household income.
