December 15, 2018
Nonprofit Leaders Say Tax Reform Could Be 'Devastating' to Mass.

December 12, 2017 — Leaders of three major Massachusetts nonprofit organizations, which collectively support or provide services to hundreds of nonprofits statewide, today said if proposed federal tax reform legislation becomes law, private food banks, homeless and domestic violence shelters, day care centers, and job training providers across the Bay State could lose millions of dollars.

Rebuking claims that final tax reform legislation would increase charitable giving, an increase of the standard deduction, included in tax bills recently passed by the House and Senate, which currently are being reconciled, would lead to lower charitable giving, they said in a written statement.

“The direct impact on nonprofits in Massachusetts could be devastating," noted Michael Durkin, president and CEO of United Way of Massachusetts Bay and Merrimack Valley, which supports more than 200 human service agencies; Jim Klocke, CEO of Massachusetts Nonprofit Network (MNN), a trade association of 700 nonprofits; and Deborah Rambo, president and CEO of Catholic Charities of Boston, a major social services agency serving eastern Massachusetts.

They said that about one million Massachusetts taxpayers, nearly a third of all those who file a federal tax return, claimed the charitable deduction, accounting for $5.5 billion dollars in giving.

"A five percent loss resulting from tax reform would mean $275 million fewer dollars to fund private food banks, homeless or domestic violence shelters, provide day care, or job training," they asserted. “A drop in giving of this magnitude would have disastrous consequences."

Durkin, Klocke, and Rambo added, "It would put hundreds if not thousands of small nonprofits across the state out of business. And it would jeopardize the financial health of medium- and large-sized nonprofits, threatening their ability to deliver services."

Not all of the $5.5 billion cited goes to Massachusetts nonprofits, as Massachusetts taxpayers donate to charities out of state. However, the amount "exported" is not known. Conversely, taxpayers outside Massachusetts contribute to Massachusetts nonprofits, and those contributions could decrease for the same reason.

Although the three leaders decried the threat to charitable giving resulting from a higher standard deduction, they did not ask Congressional leaders to adjust legislation under review to help sustain current levels of charitable giving.

To the contrary, they seemed resigned to an inevitable decrease in charitable giving, noting "We are not optimistic that the compromise bill will differ significantly from what has been passed."

However, they said they would continue to pursue "other avenues to enact a universal 'above-the-line' charitable deduction."

A United Way spokesperson said, "We expect there will be a series of smaller bills in the months following any passage of tax reform that address unintended consequences or look to make technical corrections, and we will monitor those efforts for any opportunity to advocate for a universal charitable deduction."

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