Many nonprofit organizations exist to bridge the gap between what government provides its citizens and what citizens really need. So, as our government has reduced funding over the years for cultural needs like public art accessibility, and not increased funding to deal with crises like the opioid epidemic, nonprofit organizations have stepped in to provide those services.
And most nonprofits look to individual donors and foundations as their main sources of funding – despite the pervasive misconception that nonprofit organizations are funded exclusively through our taxes.
The reality is that while many organizations do receive some public funding, often through competitive grants, it’s not very much, and it’s certainly not as much as it used to be. So I’m very much concerned about an idea included in the federal tax bill that’s come up a few times in Vermont’s tax reform debates, and never passed.
The bill proposes to double the standard tax deduction – which affects charitable giving. What that means is that many people who now itemize would instead take the standard deduction, and as a result, they’d see a decreased tax reward for giving money to good causes.
We’re not talking about the handful of million dollar donors here, but four- and five-figure gifts. These are still substantial gifts, and they keep nonprofits afloat as public funding dries up. So if these donors give less, many nonprofits will inevitably run aground.
Perhaps most worrisome is that the federal tax bill seeks to gut existing funding for vital services while it’s simultaneously gutting the private incentive to support those same services.
As a society, America already stands alone in the developed world in that taxes don’t cover necessities like health care and parental leave for its citizens. So now, we’re looking at a future that not only doesn’t provide basic supports, but also effectively strips the funding of those entities that do.
In Vermont, this could destabilize a sector that employs forty four thousand people and contributes nearly six billion dollars to the state economy. For vulnerable people and causes served by nonprofits, it could be catastrophic.
At a time of year when traditionally we demonstrate our care for others, we also need to support the people and organizations that provide that care on our behalf. Because the way things are going, their jobs aren’t likely to get any easier.
