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North Dakota nonprofits offer mixed reaction of new federal tax law

Tax forms with pen. Stock image.

BISMARCK — As nonprofits elsewhere raise alarms that the new federal tax law may hamper charitable giving, North Dakota officials are offering more mixed reactions to the changes.

Pat Berger, president and CEO of the United Way of Grand Forks, East Grand Forks and Area, predicted the overhaul would have a "profound effect" on charities. That echoed concerns raised by the charity's worldwide leader, who earlier this month told National Public Radio that fewer people will itemize their tax deductions because lawmakers planned to nearly double the standard deduction.

"When everyone is very uncertain financially about what's going on, these kinds of things, such as charitable donations, they may pull back a bit," Berger said Thursday, Dec. 28. "At the same time though, we are seeing far more need."

Only 18.6 percent of North Dakota taxpayers itemized deductions in the 2015 tax year, according to the Office of State Tax Commissioner, and only 13.4 percent included deductions for charitable contributions. Deductions for charitable contributions totaled $363.5 million that year.

The tax law signed by President Donald Trump a week ago raises the standard deduction to $12,000 for individuals and $24,000 for married couples.

North Dakota Tax Commissioner Ryan Rauschenberger, a Republican who spoke favorably of the congressional tax efforts, expects more people will use the standard deduction instead of itemizing, including himself.

"I actually have more cash in pocket to make charitable contributions," he said.

But a May 2017 report from the Indiana University Lilly Family School of Philanthropy said only 44 percent of non-itemizers "reported donating any amount of charitable giving," compared with 83 percent of itemizers. Non-itemizers contribute less than 20 percent of total giving, according to the study.

Meanwhile, leaders of the FM Area Foundation appeared less concerned than Berger about the changes. The legislation didn't change an individual's ability to make a distribution from his or her retirement account directly to a charity, the organization's Executive Director Tim Beaton said.

"For our area, we have a very philanthropic, giving community," said Greg Diehl, the foundation's development officer. "And I think most people in community, the ones that we talk to on a regular basis, they're happy to receive some kind of income tax deduction or credit for their donation, but that's not really their primary reason for giving."

That sentiment was echoed by John Glover, president and CEO of the NDSU Foundation. He predicted the tax law will have "little impact in terms of our long-term fundraising and relationship-building."

Glover said there's been a trend in higher education philanthropy where more money is given by fewer people.

"When we really look at the tax law changes, it's those folks that are the top of the income scale are those that really are going to see the benefits," he said. "These changes do nothing to change what has been a trend over the course of time."

Dayna Del Val, president and CEO of The Arts Partnership, an umbrella organization in Fargo, Moorhead and West Fargo, said while many people give out of pure generosity, some do so because of the tax incentive.

"It just feels like we are seeing the places that money can come from start to dwindle in a significant way," she said. "And that's alarming."

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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