For the first time since it began in 2010, Colorado Gives Day saw donations fall flat last year.
Local nonprofits had already experienced declines, like Goodwill Industries of Denver, which saw contributions sink by 20 percent in the prior year. Colorado nonprofits overall landed with a thud, according to new state data showing no growth in donated dollars to nonprofits registered with the state.
The Colorado Secretary of State’s 2018 annual charitable solicitation report, released this week, said $4.7 billion in donations went to a record 7,321 Colorado-based charities. But the amount was down by a few million dollars from the prior year.
Nonprofits nationwide are bracing for what could be an even larger decline in 2018 because of changes that gave taxpayers a larger standard deduction for 2018 and made itemizing unnecessary for many. However, the impact of the tax change isn’t yet known in Colorado because the latest state nonprofit data is from 2017.
“What that means is that almost half of the people who previously donated and about half of the charitable deductions they claimed on their federal return are not being itemized anymore. That amounts to about $1 billion of claimed charitable contributions,” said Renny Fagen, president and CEO of Colorado Nonprofit Association. “Those taxpayers are still going to be charitable and give, but whether they will give at the same amount remains to be seen.”
The association sent a survey to 100 nonprofits and found that 30 percent don’t expect to “meet or exceed” revenue goals for 2018. Another 14 percent “already changed their strategies in response to the tax reform,” according to the survey. However, 89 percent also said they are “somewhat and very” optimistic about 2019.
“Nonprofits are going to be looking at how they did in 2018 with individual donations and they need to make adjustments accordingly,” he said. “But they need to do that every year.”
Nonprofits, however, don’t feel Coloradans are becoming less charitable.
“They may have felt a little insecure with how the market is changing and the tax laws so they gave a little less,” said Dana Rinderknecht, director of online giving for the Community First Foundation, which organizes Colorado Gives Day. “On the other hand, we had more donors on Colorado Gives Day, which would align with the idea that people still want to give, and they still want to support their favorite nonprofits.”
Not all of 2018’s decline is blamed on tax reform. Colorado Gives Day landed on Dec. 4, the same day the stock market plummeted 800 points.
That likely had an effect on higher-income folks who donate for tax purposes. The 2018 day raised $35.1 million, or $1.5 million less than the previous year, Rinderknecht said. More people contributed than in the past. And the overall charitable spirit offset the rather ominous day.
“The most common donation last year was $100, and that was the most common donation in 2017,” she said. “We were flat, but I do think that the bigger donors didn’t give as much as they had because they were affected more by the stock market.”
Over at Community Shares, which works with employers to set up workplace giving campaigns, final numbers for 2018 are not yet in.
But anecdotally, said CEO Erin Atwell, her organization saw shifts in giving. Some donors paused on giving gifts in order to see how the tax changes would affect their income. Others switched to a donor-advised fund, which lets the donor receive an immediate tax deduction and then make grants from the fund to charities over time.
And still others moved to a “leap-year” model, where they skip a year in order to give more the next year to push them over the standard deduction.
“That’s a mixed bag for nonprofits. A key piece for budgeting is having consistent giving every year and consistent donor support,” Atwell said. “The spirit of giving continued, but I think individuals were more savvy in what will this (tax change) mean to me. We still have a generous community.”
Secretary of State data doesn’t accurately reflect all the ways that consumers are being charitable. If someone gives money to a family member in need, that’s not recorded as a charitable donation. Neither are donations on crowdsourcing sites like GoFundMe (donations “are generally considered to be personal gifts,” says GoFundMe, unless they are certified charities.)
Consumers are also supporting more social impact entities and beneficial corporations, which are mission-minded and for-profit. And other companies are having corporate events to help out charities by volunteering time instead of money.
“Those are charitable dollars that may not get captured in our reporting as well because they’re not part of the traditional philanthropic model,” Atwell said. “Some of those dollars aren’t being tracked in the same way even though they may be thought of as being the same.”
Goodwill Industries in Denver saw charitable contributions fall to $20.5 million in 2017, down from $25.9 million in the prior year. Jessica Hudgins Smith, a spokeswoman for the organization, said the decline has been a concern but people and customers have been more generous with clothing and household donations — and buying merchandise from the stores. Overall revenues for 2017 were up $2 million to $65.3 million.
“Our donation numbers are really strong. And that may be related to the (organizing consultant) Marie Kondo show,” Smith said. “There’s not one thing I can pinpoint but donations are extremely important to Goodwill and other charitable companies in Colorado. Our message we’re continually sharing is we encourage people to donate where they are because if you donate in Denver, your donations stay in Denver.”
While the federal tax change for 2018 may affect how much Coloradans donate to charities, there is a way to make charitable donations a tax write off, at least for state income taxes, said Fagen with the Colorado Nonprofit Association.
If you don’t itemize your federal return, Coloradans who donate $500 or more to charity can deduct that from their state income tax. And next year, a new state law (SB18-141) will let Coloradans easily donate their state refund to a charity of their choosing.
“The state issued $1 billion in refunds last year to two million returns,” he said. “There’s a lot of capacity to be charitable.”
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