Do people support the synagogue financially because it is advantageous in terms of taxes?
I doubt it is the first thing people think about when considering becoming a part of a synagogue community. Even when the first invoice comes for a new synagogue fiscal year, tax advantages are seldom the first thing that pops in our minds.
Maybe for people with 5 and 6 figure capital or endowment commitments to the synagogue, charitable contributions and tax planning is something to ponder. But not for most of us.
Before the recent tax law changes – taking effect in 2018 – 30% of tax filers itemized their tax returns. While we must wait for the IRS to share such information for 2018 returns, studies are predicting that only 4% to 10% of all filers will itemize. 2018 standard deductions will nearly double for everyone – $12,000 for a single filer, $24,000 for those filing jointly. It is the maximum deduction of $10,000 for mortgage interest and/or real estate taxes that will really impact the decrease in those able to itemize.
The statement “Your donation is tax deductible to the fullest extent allowed by law” should still be on dues invoices and fundraising appeals. There will still be congregants who will be able to itemize and who will benefit tax-wise by their synagogue support.
How people feel about the synagogue and its vision remain the more dominant influences related to giving.
There are still a couple of ways for contributions to be advantageous in terms of taxes. Paying one’s synagogue dues through gifts of appreciated stock, including shares of mutual funds, is still a pretty good deal. Persons doing this do not have to pay capital gains tax on the sale of the stock as they would if they were to just sell the stock outright.
To make such payments work, the synagogue has to establish a brokerage account to accept such payments electronically. Anytime invoices are sent to congregants, you might also include a statement that simply states “You can pay off your dues/pledges with appreciated stocks, bonds or mutual funds. For more information, email or call the synagogue’s executive director” (or whoever is the Lead on this).
For congregants 70 ½ and older, utilizing your IRA to pay your synagogue dues or other charitable commitments to the synagogue is the best tax advantage. Payments are made directly from the congregant’s IRA. And you can make up to $100,000 in charitable contributions from your IRA annually. Such gifts do not have to be reported as income.
Congregants with some financial savvy will know about utilizing shares of stock or mutual funds to make payments, and of course utilizing their IRAs as vehicles for charitable payments. The synagogue should highlight such payment options as well. Such payment information should always be on or included with invoices. Separate emails during December encouraging support/payments would be helpful as well.
A congregant’s “donative intent” will always be the primary reason for charitable giving. So appeal to congregants’ hearts and heads. Any tax advantage is just an additional benefit.