The last two days of the year are always the busiest for Palmetto Goodwill as donors rush to empty their closets and garages to make room for their holiday haul and take advantage of a popular deduction for charitable giving.
But the new federal tax law may stem the tide of donations next year. That's because the Republican-sponsored tax plan doubles the standard deduction to $12,000 for individuals and $24,000 for married couples, erasing some of the incentive for the millions of Americans who itemize their deductions, including for charitable donations, to reduce their taxable income.
This change is a cause for some concern for nonprofits, such as Goodwill, that rely on donor support.
"Certainly if that tax incentive is not there, there's the potential to see some drop-off next year," said Denver Merrill, public relations officer of Palmetto Goodwill.
"We’re going to certainly do our best to let people know that we still need their donations and that it helps us provide employment and job training services to folks," he added.
In South Carolina, more than 500,000 taxpayers, or nearly a quarter of filers, claimed charitable contribution deductions totaling $3.1 billion in tax year 2015, according to Internal Revenue Service statistics. The National Council of Nonprofits estimates the new tax law will shrink charitable giving by $13 billion or more each year across the country, and eliminate upwards of 220,000 jobs in the nonprofit sector.
"When I saw the estimates from the independent sector, I bristled a little bit," said Darrin Goss Sr., president and CEO of the Coastal Community Foundation. "But when I talked to donors, a lot of them take advantage of the standard tax deduction, but a lot of them do what they do because they have a heart to serve humanity. My hope is that we won't see that kind of net negative effect, but we just don't know yet."
Others in the sector touted the importance of the service mission.
“Not-for-profit organizations fill vital gaps in services where state and federal agencies can’t or haven’t," said Christopher F. Kerrigan, president and CEO of Trident United Way. "But we will have to wait and see if behavior of our donors changes because of the new tax laws."
It's possible the new tax law already has some donors scrambling to make charitable contributions while it's still advantageous. The Coastal Community Foundation has received significantly more donations over the past 45 days than this time last year, Goss said.
Likewise, end-of-the-year donations at The Salvation Army in Charleston are up 5 percent over last year, thanks in part to a last-minute push for contributions when the organization's Red Kettle Campaign fell $15,000 short of its $190,000 Christmas fundraising goal.
"As far as tax purposes go, I’m a firm believer that most people are wanting to give charitably," said Capt. Jason Burns, corps officer of The Salvation Army in Charleston. "I may be naive in that...but I really believe that people love the mission of whatever charity they donate to and so they give, and that’s really what we've been seeing this year regardless of the tax law."
Joe Elmore, CEO of the Charleston Animal Society, isn't worried about the implications of the new tax bill either.
"I think for the most part, almost overwhelmingly, donors give because they believe in the cause and they want to see solutions to problems," Elmore said. "Charitable giving is such a part of the American character. Certainly tax incentives are helpful, but they're not going make or break charities."