PHOENIX (3TV/CBS 5) - Arizona nonprofits are hoping state lawmakers provide new ways to incentivize charitable giving when leaders unveil the budget, which could happen as early as next week.
Arizona State University researchers estimate charitable donations in Arizona dropped more than $270 million in 2018. Experts attribute the decline to changes in President Donald Trump’s tax overhaul.
Nonprofits like Junior Achievement of Arizona say they’ve noticed a significant drop in individual donations.
“At this point in time, we expected to have about $30,000 more in individual contributions than we do right now,” said marketing and development senior director Anne Landers.
With a higher threshold for the standard deduction, 90% or more of taxpayers are now utilizing this simpler method to filing taxes rather than itemizing deductions. However, filers who take the standard deduction cannot write off charitable giving.
"We've reduced the number of people that are incentivized to give to a nonprofit," said Kristen Merrifield of the Alliance of Arizona Nonprofits.
The Alliance just surveyed about 65 Arizona nonprofits on the impact of the federal tax changes, she said.
"We have nonprofits that have made changes because they can't afford to do certain programs or keep staff on board. And our fear is that's going to continue to grow once we get into giving season at the end of this year because now taxpayers have already changed behavior," she said.
The state's charitable tax credits are separate and not affected by the federal changes. But Merrifield said a few hundred nonprofits qualify for them compared to the 20,000 nonprofits in the state.
"Your arts and culture, your animal welfare, your environmental groups – all those things that are really important to us as Arizonans. They don't qualify for the tax credits," she said.
The Alliance is hoping lawmakers pass HB 2359. The bill would allow Arizonans to take the charitable deduction whether they itemize or not.
The bill is designed to incentivize giving, at least on state returns. The change could cost the state about $30 million.
Merrifield says she’s cautiously optimistic after leaked state budget documents showed new funding designed to incentivize charitable giving. She says a House draft includes $24 million next year to provide a write-off for Arizona taxpayers who elect the standard deduction.
But she said her group has questions about the specifics of the funding proposal because the line item mentions a possible “25%” cap.
Groups like Junior Achievement are hoping for some relief.
"Every $100 that isn't contributed to Junior Achievement means three less students are receiving our programs," Landers said.