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Tax rate changes will have biggest impact on major donors

Charlie Butts   ( 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 has a chart reflecting the changes.

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