Amanda Malloy, ASA Director of Development

Malloy

After the new tax bill was signed into law, I began getting more questions about donor-advised funds and how the law might affect donations to the ASA. The short answer is we don’t know. It may take years before we get a clear picture of how the tax bill will affect philanthropy in this country.

The major item in the new tax bill that has some charities concerned is the increase in standard deduction to $24,000. Donations to charities are still tax deductible, but the new, higher standard deduction will drastically decrease the number of people who itemize their taxes. People who were only giving to charities so they could itemize their taxes will no longer need to do so if they take the standard deduction.

This has people considering other options for giving, such as donor-advised funds (DAFs). In a DAF, you can bundle gifts of two or more years into a single tax year and then request distributions to your charities of choice on an annual basis. This allows you, as the donor, to itemize deductions for that tax year, while still providing an annual revenue stream for your favorite charities. Fidelity Charitable, Schwab Charitable, and Vanguard Charitable are among the largest organizations that manage DAFs.

The good news for charities is most people do not give because they get a charitable deduction (according to the Lilly Family School of Philanthropy, October 2016), but a tax deduction may affect when, where, and how much they donate. Many of you donate to the ASA because you believe strongly in the organization and what, together, we accomplish for statistics education, our fellow statisticians, and society in general. If there is a way to give to the ASA and still get a tax benefit, though, that’s even better!

The popularity of DAFs has steadily increased. Last year, with the new tax law looming, there was a huge spike in the number of new DAFs. According to a February 1, 2018, Wall Street Journal article by Richard Rubin, Fidelity Charitable reported bringing in twice its goal for numbers of new DAF accounts at 22,000, and Vanguard reported doubling its last year’s total accounts. It is not certain if the new tax law (which provides an estimated $1,600 after-tax increase in income for the average household), the strong economy, or a combination of both is the reason behind the large increase.

Bottom line is donor-advised funds are a good option to consider and much more in reach than you might think, especially as they continue to become more popular.

As always, I’m happy to hear from you if you have questions or comments. I can be reached at amanda@amstat.org. Thank you for your support of the ASA!