Today is Giving Tuesday ... launched in 2012 to encourage people to follow up their spending on Black Friday, Small Business Saturday, and Cyber Monday by contributing to charity. From food banks to disaster relief, environmental protection to youth programs, U.S. charities benefited from at least $177 million in online donations on Giving Tuesday in 2015 (per the Giving Tuesday website). If the GOP has its way, that total will be dramatically reduced in future years.
One of the reasons the US has traditionally led the world in charitable giving is that our tax code has been designed to encourage it: taxpayers can deduct from their taxable income their donations to charitable organizations (from churches to the wide array of 501c3 organizations). Thus, each gift to a charity is in part subsidized by our tax code. This had led to a diverse and vibrant nonprofit sector in the US, reflected with 1.4 million organizations employing 11.4 million workers — about 10% of the American workforce. www.independentsector.org/… (Disclosure: I am part of that 11.4 million workforce).
While the GOP tax bill preserves the deduction for charitable gifts, the shift to a larger standard deduction (which the GOP is combining with the elimination of exemptions) will mean that far fewer Americans, particular those in the middle or upper middle classes, will itemize their deductions. The Tax Policy Center estimates that 13 million Americans would itemize deductions under the House proposal in 2018, compared to 46 million under current law. (www.taxpolicycenter.org/...) That means that the tax benefits of charitable giving will disappear for 33 million taxpayers. Of course, some donors will continue to give just as much — but the loss of the tax incentive will result in some decline. The Tax Policy Center estimates that individual giving would decline by between $12 and $20 Billion in 2018 — a decline of between 4 and 6.5%. I would add that individual giving is disproportionately important for many nonprofits, because it tends to be in the form of unrestricted gifts that can be used where they are most needed — as opposed to foundation grants which usually are restricted to a specific project or program.
As if this hit wasn’t enough, the proposed reduction in the estate tax (or — if as Trump and others have suggested — its complete repeal) would also hit charitable giving through bequests. Such gifts accounted for 8 percent of charitable contributions in 2016 — more than $30 billion in donations. The Center for American Progress notes what repeal of the estate tax could mean:
The Congressional Budget Office (CBO) estimates that eliminating the estate tax could reduce charitable giving through wills by between 16 percent and 28 percent—and other studies have found even larger effects. When the estate tax was temporarily repealed in 2010, charitable bequests declined by 37 percent.
In total, CAP estimates (for 2024) that estate tax repeal would reduce annual bequests to charities by $7.7 billion — ranging from $2.5 billion to religious charities, to $650 million to health charities, to $343 million to art & culture related charities. www.americanprogress.org/...
Bottom line: our nonprofit sector can be added to the considerable group of victims that the GOP is prepared to sacrifice at the altar of tax cuts for the wealthiest individuals and corporations.
So I’ll ask you: please celebrate Giving Tuesday by taking two important actions. First, donate to your favorite charities (and share links to their donate pages in the comments, as I will for some of mine) - and second, contact your Senators and urge them to oppose the Trump Tax Scam that will undercut support for America's charities.