Dear Members of the Minnesota Legislature,

Minnesota’s charitable organizations are an important part of strong, thriving communities. All 501(c)(3)’s, which includes nonprofits, religious organizations, and some foundations carry out a wide range of activities that improve the quality of life, from health, to education, to human services, and the arts. Additionally, nonprofit employers contribute to job growth and economic stability in every region of the state.

In order to carry out this vital work, the nonprofit sector relies on charitable giving to fuel their missions. Therefore, the Minnesota Council of Nonprofits, along with the enclosed organizations, urge Minnesota legislators to strengthen the state’s charitable deduction for non-itemizers by supporting HF 3464/SF 3777.

Now is the time to strengthen the charitable deduction because the federal tax plan caused unintended consequences on charitable giving. As a result of the nearly doubling of the standard deduction, the number of Minnesotans who will be able to itemize their charitable gifts will decrease by approximately two-thirds. Fewer people itemizing means fewer people will have a federal tax incentive to donate to nonprofits.

Minnesota’s state tax code currently encourages non-itemizing households to support charitable organizations, but it is not strong enough. Only 50 percent of donations over $500 are counted towards the charitable deduction. We believe that the tax code reflects Minnesota’s values and by removing the $500 floor and the 50 percent limit, we can encourage more giving by all Minnesotans. And, at the end of the day, all taxpayers deserve recognition for their meaningful contributions, whether large or small.

While we know that people support nonprofit and religious organizations because of their values, we also know that tax incentives play an important role in the decision to donate. For example, 30% of all charitable gifts are made during the month of December, with 13% of all gifts made in the last three days of the month.

As you are putting together a tax plan this session, please include a provision that strengthens Minnesota’s charitable deduction. Thank you for your past and continuing partnership. We appreciate your attention to these concerns as you develop your tax plan.

Sincerely,