In 2017 (the most recent data collection by Giving USA), Americans contributed $410.02 billion to charity. These charitable dollars are vital to America’s charities, which continue to face tremendous demand for their services. Unfortunately, the Tax Cuts and Jobs Act (TCJA) of 2017 has made it less beneficial for average Americans to donate to charities. Fewer Americans are making charitable donations. Indiana University’s Lilly Family School of Philanthropy has found that the percentage of Americans who give has fallen by 11 percent over the past 14 years – from 67 percent in 2002 to just 56 percent in 2014. The doubling of the standard deduction in the TCJA will likely accelerate this trend.
The Fundraising Effectiveness Project (FEP) found that the total number of donors dropped by 4.5% between 2017 and 2018. The FEP study also found that while total giving from gifts of $1,000 or more increased by 2.6%, gifts in the $250-$999 range dropped by 4.0%, while gifts under $250 dropped by 4.4%. These small donations are the lifeblood of smaller nonprofits that operate on shoestring budgets. Additionally, Blackbaud’s 2018 Report on Charitable Giving found while GDP in 2018 grew by 3 percent – charitable giving grew by just 1.5 percent. And an American Enterprise Institute report projects that the TCJA will reduce charitable giving by individuals by $17.2 billion (6 percent) in 2018, primarily due to the doubling of the standard deduction.
The House Ways and Means Committee held a hearing regarding issues surrounding the TCJA on Wednesday, March 27th 2019 titled The 2017 Tax Law and Who it Left Behind. While it did not center on the charitable sector, Representative Tom Suozzi (D-NY) made sure to note that charities and nonprofits were also “left behind” as a result of the TCJA. A report by the Joint Economic Committee was also done to highlight the ways nonprofits are being impacted by
The Charitable Giving Tax Deduction Act (H.R. 651), introduced to the House by Representative Christopher Smith (R-NJ), would allow for an above-the-line deduction. While this is promising, it does not incentivize every American to donate. Congress can address this problem – and increase charitable giving – by enacting a universal charitable deduction to benefit all Americans. Such a proposal would offer every American taxpayer an incentive to make a charitable donation, not just those who itemize their taxes.
For another perspective on this important issue, visit the United Philanthropy Forum blog for a post by Forum President David Biemesderfer.
Check back for updates as the charitable landscape responds to changes in policy!
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