When the Tax Cuts and Jobs Act became law this year, it changed many aspects of charitable giving, from increasing the standard deduction to limiting the state and local tax/property tax deduction, among others changes.

Through 2017, taxpayers could deduct the full amount of their cash contributions to charity as long as the deduction didn’t exceed 50% of their adjusted gross income. Tax reform bumped the AGI limit on cash donations to 60%; carry-forward rules also allow donors who contribute more than 60% of AGI in a single year to carry forward the excess of the gift as a deduction for the next five years.

But in terms of charitable giving, the most important change under reform “has to be the enhanced standard deduction,” says Mary Kay Foss, a certified public accountant in Walnut Creek, Calif. The standard deduction jumped to $12,000 for individuals and $24,000 for married couples filing jointly, nearly double the former standard deduction.

Also, “many people don’t realize the combined impact of the SALT [state and local tax] limitation and the elimination of miscellaneous itemized deductions, especially employee business expenses, on their ability to itemize,” says Robert Seltzer, CPA at Seltzer Business Management in Los Angeles. “Unless clients have a significant mortgage deduction, they’ll be using the standard deduction. The question that they ask is whether their charitable contributions are still deductible.”

Internal Revenue Service statistics show that in past years approximately 30% of tax filers itemized instead of taking the standard deduction, according to Gail Rosen, CPA and shareholder with Wilkin & Guttenplan in Martinsville, N.J. “Due to the provisions of the [Tax Cuts and Jobs Act], the number of people who itemize is expected to fall to about 10%,” she says. “This is going to hurt funding for many charitable organizations because people are incentivized when they donate and receive a tax benefit.”

Rosen recommends three potential donation tools that remain effective post-reform:

Bunching deductions. Your wealthy clients can donate to charitable organizations in one calendar year instead of spreading out their contribution over many years. For example, if your high-net-worth client were going to contribute $5,000 to a charity each year in 2018, 2019 and 2020, he or she would instead donate $15,000 in 2019, itemize for that year and take the standard deduction in the other years.

Donor-advised funds. In this case, “the taxpayer claims a charitable deduction the year he or she deposits the funds in the [donor-advised fund],” says Rosen, adding that people can pay money out of the fund to various charities over many years. Many brokerage accounts offer these funds.

Donor-advised funds work under the same principle of bunching, Seltzer adds, “but allow you to fund the charities as you previously did. The deduction is based on when the money is put into the fund, not when it’s doled out,” he says.

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