Representatives of charities of many kinds are holding their breath on whether the Tax Cuts and Jobs Act, signed into law just before Christmas, is going to dampen donations during 2018.
Headlines have predicted as much. The Los Angeles Times blared, “The GOP Tax Reform Will Devastate Charitable Giving,” while The New York Times declared, “Charities’ Fear Under Tax Bill: Less Money to Help the Needy.”
According to one think tank (Tax Policy Center), overall U.S. giving is expected to fall by 4 to 6.5 percent, or $12 billion to $20 billion. Why? Because the standard deduction has been essentially doubled (to $24,000 for a married couple filing jointly), which makes specific deductions such as medical outlays, property taxes, and charitable donations less strategic.
Pastors and church boards aren’t yet pushing the panic button. However, they are paying closer attention to what’s coming — or not coming — into the offering plate.
“January and February giving started out slow,” says Jon D. Lawson, lead pastor of New Life Church, an Assemblies of God congregation in Yorkville, Illinois. “But then, it usually does. I’ve noticed over the years that things don’t pick up until March, when some income tax refunds (from the previous year’s filing) start coming through. We’ll know more as the year unfolds.”
A similar report comes from Craig V. Riportella, lead pastor of Centerpoint Community Church, an AG body in Waterville, Maine.
“The first couple of months this year have been down, enough to concern us,” Riportella says.” But is that due to the tax changes, or just the ‘winter blues’? This is the time of year when heating bills are high and snow removal costs hit their peak. Thankfully, we’re still making our budget.”
Some pastors may be looking for a silver lining: Are church members tithing more these days as a result of slightly larger paychecks, due to the newly revised tax withholding formulas that took effect in February? It doesn’t appear so, at least not yet.
“Church leaders will be wise to encourage giving based on biblical stewardship, regardless of getting a tax advantage,” says Don H. Steiger, superintendent of the Rocky Mountain Ministry Network, which covers Colorado and Utah. “I believe most pastors and churches already do this, but it will become even more important in the future.”
One large AG church in Illinois experienced a 25 percent drop in giving almost immediately after enactment of the tax law.
“They’ve had to go into their reserves while they make adjustments,” says Louie L. Salazar, coordinator of church administration resources for the Illinois District Council. “I’m advising all our churches to watch their income very carefully — even week to week. At the next monthly board meeting, the financial report may already be as much as six weeks behind the curve.”
Other factors to notice include whether some sharp-eyed givers actually prepaid their 2018 tithes back in December 2017, to gain the tax advantage before the rules changed. If so, they may be writing smaller donation checks now.
In agricultural areas, some farming households are more worried about their export sales being hurt by new trade tariff backlashes.
“If other countries decide they don’t want to buy as much Illinois corn and soybeans, our farmers will definitely feel the pinch,” Lawson says.
For Christians, the shifting financial landscape brings an unexpected refocus on motives for giving. Do followers of Christ give out of pure gratitude and obedience to God, whether Uncle Sam’s rules bring favor or not? For many believers in other lands, the thought of a tax break never crosses their minds on Sunday morning; they simply give with joyful hearts.
“It’s good for all of us to ask ourselves, Is God my Provider, or not?” says Riportella. As the year rolls on, many American church leaders and congregations will be revisiting that vital question.