Church Giving and The New Tax Law

From the Spring 2018 Issue of The Steward from the Insurance Board

Giving to houses of worship was a truly a “win-win scenario” in 2017.

Our congregants gave from their hearts in support of our mission, and, in doing so, received the opportunity to deduct those contributions on their tax returns. According to Giving USA, charitable giving to religious organizations comprised 32% of all charitable giving in 2016. Clearly, our church members know the meaning of generosity.

However, this situation may change for the 2018 tax year. Effective January 1, 2018, the new tax law, the Tax Cuts and Jobs  Act of 2017, offers a mixed bag for churches regarding congregant giving.  Projecting  how  the  new tax law will impact giving is difficult, as the tax law “giveth and taketh away” in its impact on giving to religious organizations.

On the giving side, the new tax law lowers tax brackets, resulting in higher take home pay. In theory, congregants should have additional disposable income to use for giving. The tax law also allows for other avenues of giving that may appeal to certain church members. Donations of appreciated assets such as stocks, bonds and real estate, allow givers to sig- nificantly reduce taxes as do Quali- fied Charitable Distributions from an Individual Retirement Account.

On the flip side, in an effort to simplify tax filings, the new law raised the standard deduction almost two-fold, to $12,000 for single filers and to $24,000 for married filers, which may result in a lower number of taxpayers choosing to itemize and, in turn, may reduce church giving. Another area where churches may see an impact from the new tax law, is in the increase in the size of estates subject to Federal estate tax. This threshold was increased  to $22 million thus reducing the incentive for smaller estates to donate estate proceeds to churches and ministries.

As mentioned, it is difficult to project the impact of the new tax law on individual congregations, so it is best to view these changes as an opportunity to re-engage with congregants and share our mission and vision with them. Church members want to better understand the good we are doing in our church community and the wider  world.

The change in the tax law may be used as a conversation starter to let church members know the good that is accomplished with their donations. Some suggestions to engage church givers:

  • Focus on the positive that do- nations can do rather than the loss of deductibility
  • Engage congregants regularly about stewardship
  • Share financial information about church operations and programs so givers better understand needs and desired outcomes
  • Set expectations for church member giving
  • Share impactful stories of how giving makes a difference as personal stories resonate with givers
  • Seek feedback to better understand what motivates givers
  • Expand how donations are received including using your website and online platforms
  • Respond to church givers with a heartfelt “Thank you”