Donation centers hope for spring cleaning spike, amid questions about new charitable tax deduction

MADISON, Wis. — The new tax plan approved by Congress at the end of 2017 nearly doubles the standard deduction for individuals and families. While that simplifies the filing process for millions of Americans, it will likely complicate the process for many who have made a habit of deducting their charitable contributions.

Under the new tax bill, the standard deduction will rise to $12,000 for individuals and $24,000 for married couples. That means many taxpayers who used to itemize deductions may find it’s no longer beneficial for them to do so because they won’t add up to as much as the new standard amount. People close to the cut-off may stop giving altogether, warn tax experts, which could hurt Madison donation centers like Agrace Hospice’s thrift stores.

If an individual donates more than the amount of the standard deduction, they’ll no longer save on taxes from their donation. Under the new law, some may consider pooling their donations in certain years. For example, it may be financially beneficial to donate and itemize gifts every other year, when they can beat the standard deduction.

It’s a strategy accountants call “bunching,” and it could save taxpayers money under the new plan.

But it leaves open a big question: What happens to non-profits that rely on a steady stream of donations to operate every year?

“We need that consistency,” said Judy Purcell, Agrace’s retail business manager. “We see a real uptick of donations with spring cleaning. We do have a little bit lower donation season in the northern winter months, so we feel that a little bit. But once that upticks, we look for that consistency the rest of the year.”

Whether or not that trend continues for Agrace this year remains to be seen. In the meantime, the shop encourages locals to continue shopping, donating, and collecting charitable receipts as usual.

Agrace isn’t the only non-profit uncertain of the new tax law’s effect. After the law passed, Leadership 18, a group of big-name charities like the American Cancer Society, the American Red Cross, and Goodwill, spoke out in favor of a return to the universal charitable deduction.

The president of United Way Worldwide put it this way: “Americans will never stop giving, but we know that tax incentives are important to how much they give.”

Agrace isn’t worried the new tax law will significantly affect its volume of product donations, but agrees its effect on cash donations isn’t clear.

“We hear people all the time say that they need to get it out of their house and they’ve already got a bag or two in their car,” said Purcell. “I think we’ll still see donations because people don’t want to store and keep it.”

Agrace Hospice serves 800 families in southern Wisconsin and northern Illinois. All the money collected through its thrift shops benefits their care services, including treating patients and providing therapy to families for one year following hospice care.

300 volunteers work at Agrace Hospice Care’s three thrift shop locations in Wisconsin, two in Madison and one in Janesville. The shops accept donations of clothes, shoes, home goods, and books.

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