Increasing Charitable Giving Across the US
For over a century, our nation’s tax system has encouraged Americans to give back to their communities by providing tax deductions for contributions to charitable organizations. This culture of giving is at risk.
In addition to the existing itemized deduction, Congress created a $300 charitable deduction in March 2020 for cash donations made by those who do not itemize on their taxes, sometimes referred to as a “universal charitable deduction.” In December 2020, this deduction was expanded to $600 for joint married filers and extended through 2021.
According to data from the Fundraising Effectiveness Project, individual giving in 2020 increased by 10.6% from the previous year, with small donations increasing by 15.3%. On December 31, 2020, there was a 28% increase in donations of exactly $300, then the maximum amount allowed for non-itemizers.
What’s at Risk
While the 2017 tax law retained the charitable deduction, it made other structural changes to the tax code – like increasing the standard deduction and repealing personal exemptions – that eliminated this incentive to give for about 21 million taxpayers. While estimates vary, there is strong consensus from charitable research experts that this will decrease giving by billions of dollars per year. Over the past 15 years, the number of Americans who donate to charity dropped 11 percentage points. Without tax incentives, this alarming trend will accelerate.
Expand the Charitable Deduction
Every American should have an incentive to invest in their community by engaging in charitable giving, regardless of whether they itemize their taxes. This would allow charities to serve more people and make the tax code fairer. Independent Sector is working collectively with our partners and members to engage policymakers on this critical priority.
Congress can help the nonprofit sector better serve the nation by enacting the Universal Giving Pandemic Response and Recovery Act (S. 618/H.R. 1704), led by a bipartisan, bicameral group of lawmakers. The legislation would raise the $300/$600 cap to roughly $4,000 for individuals/$8,000 for couples and extend the deduction through 2022.
Modeling research shows that a proposal like S. 618/H.R. 1704 could generate $17 billion in additional giving per year if made permanent. Representatives Chris Smith (R-NJ) and Henry Cuellar (D-TX) have introduced Charitable Giving Tax Deduction Act (H.R. 1081) that would replace the current $300/$600 deduction with a permanent, uncapped charitable deduction for all taxpayers.
Learn to lead your organization in sustainable fundraising in the class on Sustainability – Campaigning to Potential – Part II: Big Gifts on Saturday, February 18 from 1 – 5 pm as part of the Sunshine Certificate in Nonprofit Management.
Learn how to assure that your organization is a leader in civic engagement/advocacy in the Discovering Trends Through Civic Engagement class on Saturday, April 24 at 1 pm as part of the Sunshine Certificate in Nonprofit Management.
Source: Independent Sector – Nonprofit Policy Issues, Charitable Deduction Independent Sector brings together a diverse community of nonprofits, foundations, and corporate giving programs. Florida Nonprofits has been a member of Independent Sector since 1991 and they have been a trusted source for us and our members. They are a source for advocacy information and our advocacy program.
Tool kit https://independentsector.org/resource/everydonationcounts/
These tools are designed to help you connect directly with policymakers and their staff to make the case for extending the charitable deduction to 100% of taxpayers.