The Impact of the Tax Cuts and Jobs Act on Arts Nonprofits
Poster Number
026
College
College of Business Administration
Department
Accounting, Finance & Economics
Abstract
The importance of nonprofit organizations is widely known. Federal policies that impact nonprofits deserve examination to ensure the vitality of such organizations. This thesis examines the impact of the Tax Cuts and Jobs Act on nonprofit organizations. Nonprofits rely greatly on donations to operate, and the new tax code’s changes concerning deductions and marginal tax rates alter incentives for charitable contributions. Through predictive analysis, the influence of these tax changes on charitable giving to nonprofits will be examined. The effects of the Tax Cuts and Jobs Act will begin to be seen as 2018 data are revealed; however, many of the effects are predicted to ensue in 2019 after individuals learn the new tax law. The magnitude of the change in charitable contributions will be dependent upon the price elasticity of charitable giving, which will be estimated and used to calculate giving reductions. The impact nonprofits will experience is also dependent upon the type of nonprofit organization. Arts nonprofits are among those that are expected to fare the worst, as most donors are marginally attached to these organizations as compared to others. The economic impact of the arts has been well established, lending concern to this prediction. If donors respond to the Tax Cuts and Jobs Act as expected, and changes are not made by federal legislation or nonprofit administration, negative impacts on the nonprofit arts community will ensue. Proposals for individual giving behavior, nonprofit donor strategy, and policy are presented to reveal how these negative results can be alleviated.
Honors Thesis Committee
Laura Ullrich, Ph.D.; Louis Pantuosco, Ph.D.; and Kelly Ozust, M.F.A.
Start Date
12-4-2019 2:15 PM
End Date
April 2019
The Impact of the Tax Cuts and Jobs Act on Arts Nonprofits
Richardson Ballroom – DiGiorgio Campus Center
The importance of nonprofit organizations is widely known. Federal policies that impact nonprofits deserve examination to ensure the vitality of such organizations. This thesis examines the impact of the Tax Cuts and Jobs Act on nonprofit organizations. Nonprofits rely greatly on donations to operate, and the new tax code’s changes concerning deductions and marginal tax rates alter incentives for charitable contributions. Through predictive analysis, the influence of these tax changes on charitable giving to nonprofits will be examined. The effects of the Tax Cuts and Jobs Act will begin to be seen as 2018 data are revealed; however, many of the effects are predicted to ensue in 2019 after individuals learn the new tax law. The magnitude of the change in charitable contributions will be dependent upon the price elasticity of charitable giving, which will be estimated and used to calculate giving reductions. The impact nonprofits will experience is also dependent upon the type of nonprofit organization. Arts nonprofits are among those that are expected to fare the worst, as most donors are marginally attached to these organizations as compared to others. The economic impact of the arts has been well established, lending concern to this prediction. If donors respond to the Tax Cuts and Jobs Act as expected, and changes are not made by federal legislation or nonprofit administration, negative impacts on the nonprofit arts community will ensue. Proposals for individual giving behavior, nonprofit donor strategy, and policy are presented to reveal how these negative results can be alleviated.
