Charity In The Age Of Trump

Under the new tax law, fewer Americans will get deductions for their charitable contributions. But wealthy and older donors and those who plan ahead will do fine, says giving guru Robert Sharpe Jr.

- Ashlea Ebeling

In the 1990s, when Robert Sharpe Jr. and his brother took over the Sharpe Group from their dad, Memphis got a renovated planetarium. How did that work? Sharpe Sr., who started the family business, which structures charitable gifts to minimize taxes and maximize impact, donated company stock to a charity, and his sons bought the stock back over time, with their payments funding the planetarium. The maneuver saved the family a heap in income, estate and gift taxes. The renamed Sharpe Planetarium got spiffy new sound and automation technology and seating that finally gave the audience a full view of its dome.

But such civic largesse could be rarer in the Donald Trump era. The tax overhaul the president signed in December chops the number of families with an incentive to do such deals: It doubles—to $22.4 million—the amount a couple can pass to heirs, tax-free, without any charitable gambits. It also halves—from 21% to 9%—the share of individual income tax filers benefiting from itemized charitable deductions. That could cost charities as much as $20 billion a year in donations, according to estimates from the nonpartisan Tax Policy Center.

Sharpe, 64, argues that the changes needn’t reduce giving as much as charities fear. One reason: There are techniques middle-class folks— and particularly retired ones—can use to claw back charitable tax breaks the law took away. Another: Two obscure provisions in the new law fatten the tax benefits for richer donors. “The real winners in this, as in the rest of the tax bill, are the wealthiest people,” Sharpe says.