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Tax rate changes will have biggest impact on major donors

Charlie Butts   (OneNewsNow.com) Thursday, January 10, 2013

The fiscal cliff did some damage to charitable giving, but it's not the disaster feared late last year.

The tax rate is going up for individuals making $400,000 or more, the capital gains tax is increasing from 15 to 20 percent, and the Pease Amendment has been reinstated for households earning $300,000 or more, implementing a three-percent reduction in deductions. Rick Dunham of Texas-based Dunham+Company was asked what impact non-profits and churches might see from donors.

Dunham, Rick (Dunham and Company)"The $250,000 to $500,000 earners will probably see a pretty minimal impact, but the higher the earnings the more the impact," he tells OneNewsNow. "Because as you move away from that $300,000 threshold, with that difference if a person makes a million, million and a half, two million, their overall deductions will be reduced pretty dramatically."

The impact on non-profits, he says, will depend on the makeup of donors.

"If you have a very broad base of supporters who tend to give the $50 and $100 gifts and that are middle-class to upper middle-class or lower upper-class, I think there's going to be virtually no impact," Dunham says. "But if you're an organization highly reliant on major donors with very big gifts, I think you could potentially see a huge impact."

Dunham recommends that non-profits build a diversified portfolio of supporters. Giving Research.net has a chart reflecting the changes.

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