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Federal Charitable Giving Incentive

Submitted by cnp_admin on Tue, 01/13/2015 - 9:35pm

The federal charitable giving incentive was significantly reduced under the new federal tax law [1] because of the near doubling of the standard deduction, which results in a decline in the number of people who itemize. No one knows the extent of the impact that the changes under the new federal tax law will have on the ability of charitable nonprofits to raise the resources needed to provide the programs and services that fulfill their missions. It is imperative that Congress reverse the harmful effects by passing a universal, also known as a non-itemizer, charitable deduction to create a giving incentive for all taxpayers.

Why it Matters

Raising the standard deduction or capping all itemized deductions, including charitable giving effectively takes away incentives for donations to churches and synagogues, domestic violence shelters, early childhood programs, food banks, school alumni groups, and all other charitable nonprofits, and would further reduce the ability of charitable organizations to meet the increasing need for services in their communities.

Nonprofit organizations throughout the United States are dedicated to the public good; their work improves lives, strengthens communities and the economy, and lightens the burdens of government, taxpayers, and society as a whole. Maintaining the value of the charitable deduction is essential to the ongoing work of nonprofit organizations in delivering essential services, enhancing quality of life, and uplifting the spirit of faith, innovation, and inspiration in local communities across America.

Where We Stand

Charitable nonprofit organizations throughout the United States are dedicated to the public good; their work improves lives, strengthens communities and the economy, and lightens the burdens of government, taxpayers, and society as a whole. Consistent tax policies at the federal, state, and local levels are critical to the success of charitable nonprofits in pioneering and implementing solutions to community problems and aspirations. The National Council of Nonprofits is committed to preserving the tax-exempt status of organizations contributing to the well-being of their communities and strengthening and expanding incentives for individuals to give their time and money to the organizations whose missions they support. In practice, this commitment means … supporting existing, enhanced, and new tax and other incentives (including a non-itemizer deduction) at the federal, state, and local levels that encourage individuals to volunteer their time and contribute money to the missions of all charitable nonprofits and opposing floors, caps, or limits on existing charitable giving incentives.

Public Policy Agenda [2]

What Nonprofits Can Do

Help protect the charitable giving incentive that supports the work of nonprofits in our communities now and in the future by sharing your story here [3] and contacting your Senators and Representatives to tell them how the giving incentive translates into impact in your community. Let Congress know it can still preserve charitable giving incentives by enacting a non-itemizer or universal deduction to avoid the negative consequences resulting from the new federal tax law.

Status

The new federal tax law increases the standard deduction for individuals (to $12,000), couples (to $24,000), and heads of households (to $18,000), resulting in a decline in the number of those who itemize from 30% of taxpayers to approximately 13% of taxpayers, according to the Joint Committee on Taxation [4]. Experts estimate the change will shrink giving to the work of charitable nonprofits by $13 billion or more each year, costing 220,000 to 264,000 nonprofit jobs. Charitable and philanthropic organizations did not oppose doubling the standard deductions, but instead offered a solution to avoid the devastating consequences. To hold the work of charitable nonprofits harmless under the proposed changes, they proposed including a universal charitable deduction [5] to create a giving incentive for all taxpayers. Those efforts were not successful. The increase in the standard deduction expires after 2025. 

Proposals to Alter the Charitable Deduction

  • Universal / Non-Itemizer Deduction (H.R. 3988 [5]/S.2123 [6]): The legislation would grant a charitable deduction to all taxpayers by allowing individuals who take the standard deduction to also deduct charitable donations of up to $4,000 for individuals and $8,000 for couples on their federal income taxes.
  • Charitable Giving Tax Deduction Act (H.R. 5771 [7]): The bipartisan bill, introduced by Representatives Chris Smith (R-NJ) and Henry Cuellar (D-TX), would enable all taxpayers to deduct charitable donations from their taxes, regardless of whether they itemize. The amount a taxpayer could deduct would not be capped. The introducers stated [8] they worked together "to support charitable organizations and ocntinue incentivizing taxpayers to give to the causes they care about."
  • CHARITY Act (S.1343 [9]): The Charities Helping Americans Regularly Throughout the Year Act of 2017 [10], introduced by Senators John Thune (R-SD), Bob Casey (D-PA), Ron Wyden (D-OR), and Pat Roberts (R-KS), amends the Internal Revenue Code to encourage charitable giving and ensure the value and scope of a charitable contributions not be diminished through tax reform. The legislation would expand the IRA charitable rollover to include distributions to Donor Advised Funds (DAFs); simplify the private foundation excise tax rate by setting it at 1%; require all tax-exempt organizations to file the Form 990 electronically; and authorize the Treasury to align the standard mileage tax deduction rate with medical and moving rates.

Recent News

  • Charitable Giving: Learning Lessons from Einstein, Prometheus, and CEP Research [11], June 4, 2018.
  • Uncapped Charitable Deduction Bill Introduced [12], Nonprofit Advocacy Matters, May 14, 2018.
  • In Support of a Charitable Giving Incentive for All Americans [13], January 8, 2018.
  • The House tax bill unleashes a dangerous avalanche of campaign cash [14], The Washington Post, November 18, 2017.
  • House, Senate Tax Bills Advance; ACTION NEEDED [15], Nonprofit Advocacy Matters, November 17, 2017.
  • Losing Tens of Billions of Dollars in Charitable Giving - Every Year [15], Special Edition: Nonprofit Advocacy Matters, November 17, 2017.
  • House Tax Reform Bill Unveiled; Impact on Nonprofits Considered [16], Special Edition: Nonprofit Advocacy Matters, November 2
  • The House Tax Bills Is Not Very Charitable to Nonprofits [17], Tax Policy Center, November 15, 2017
  • There's a wolf in sheep's clothing hiding in the GOP tax bill [18], The Hill, November 8, 2017.
  • The Good (?), the Bad, and the God-awful: Nonprofit Bottom Lines on the House Tax Bill [19], Nonprofit Quarterly, November 6, 2017.
  • A very unhappy 100th birthday for the chartiable deduction [20], The Hill, October 20, 2017
  • An Uncertain 100th Birthday for the Charitable Deduction [21], Nonprofit Advocacy Matters, October 2, 2017
  • Non-Itemizer/Universal Charitable Deduction [22], Nonprofit Advocacy Matters, August 7, 2017
  • Giving Incentives Proposed, Advocacy Matters [23], Nonprofit Advocacy Matters, June 26, 2017
  • White House Releases Tax Reform Outline [24], Nonprofit Advocacy Matters, May 1, 2017 
  • Contributing Centennial Celebrated [25], Advocacy Matters, March 20, 2017
  • Ambitious Congressional Agenda Confronts Obstacles, Delays [26], Advocacy Matters, February 21, 2017
  • Nonprofits, Foundations Show Support for Charitable Giving Incentive [27], Advocacy Matters, February 21, 2017
  • Time to Advocate in Support of the Charitable Giving Incentive: 100 Years Giving DC Fly-In [28], Advocacy Matters, February 6, 2017
  • The First 100 Days [29], Advocacy Matters, January 1, 2017

Additional Resources

  • Tax Cuts & Jobs Act (H.R. 1) | House Tax Reform Bill [30], National Council of Nonprofits
  • Tax Cuts & Jobs Act | Senate Tax Reform Bill [31], National Council of Nonprofits
  • Comparison of House and Senate Tax Bills and Impacts on Nonprofits [32], National Council of Nonprofits
  • Charitable Nonprofits, Foundations Agree: It's Time to Vote No on the House Tax Bill [33], joint statement from the National Council of Nonprofits and Council on Foundations, November 13, 2017
  • News Release: Last-Minute Change to Tax Reform Bill Hardens Nonprofit Opposition [34], National Council of Nonprofits, November 9, 2017.
  • News Release: House Tax Bill Gives Political Churches a Multi-Billion Dollar Payoff [35], National Council of Nonprofits, November 7, 2017.
  • News Release: Nonprofits, Nation Cannot Afford This Proposed Tax Reform Plan [36], November 2, 2017.
  • Unified Framework for Fixing Our Broken Tax Code [37], September 27, 2017
  • National Council of Nonprofits’ Statement on Tax Reform Framework’s Potential Consequences for the Work of Nonprofits [38], September 27, 2017
  • National Council of Nonprofits' Statement on Proposed Tax Reform Outline's Effects on Nonprofits [39], April 26, 2017
  • Federal Tax Reform [1], National Council of Nonprofits
  • Comments of the National Council of Nonprofits on Federal Tax Reform [40], April 15, 2015, urging Senators to apply the following question to all tax reform proposals they consider: “How does a potential tax policy change enhance, or undermine, the ability of individuals to secure essential services, to enjoy the programs and activities that enhance their quality of life, and uplift the spirit of faith, innovation, and inspiration in local communities across America?”
  • Congressional Budget Office Analysis of Reforms to the Charitable Deduction [41]
Categories: 
Federal Policy Issues [42]
Tags: 
Incentives [43]
Tax [44]
Tax Incentives [45]
Charitable Incentive [46]
Charitable Deduction [47]
Giving [48]
Donation [49]
Feldstein [50]
Itemized Deduction [51]
Cap On Deduction [52]

Source URL: https://www.councilofnonprofits.org/trends-policy-issues/federal-charitable-giving-incentive

Links
[1] https://www.councilofnonprofits.org/trends-policy-issues/federal-tax-law-tax-cuts-jobs-act
[2] https://www.councilofnonprofits.org/public-policy-agenda
[3] https://www.councilofnonprofits.org/lift-your-voice-protect-charitable-giving-incentives
[4] https://www.jct.gov/publications.html?func=startdown&id=5060
[5] https://www.congress.gov/bill/115th-congress/house-bill/3988
[6] https://www.congress.gov/bill/115th-congress/senate-bill/2123?q=%7B%22search%22%3A%5B%22Universal+Charitable+Giving+Act%22%5D%7D&r=2
[7] https://www.congress.gov/bill/115th-congress/house-bill/5771?r=1
[8] https://www.councilofnonprofits.org/sites/default/files/documents/smith-cueller-dear-colleague-letter-5-23-2018.PDF
[9] https://www.congress.gov/bill/115th-congress/senate-bill/1343?q=%7B%22search%22%3A%5B%22s.1343%22%5D%7D&r=1
[10] https://www.thune.senate.gov/public/_cache/files/3dc80d36-6ccd-4d87-9dc8-f4fa33b22ed5/F5C7105867D819A1DDADB7C755E15C9A.charity-act-summary.pdf
[11] https://cep.org/learning-lessons-from-einstein-prometheus-and-cep-research/
[12] https://www.councilofnonprofits.org/civicrm/mailing/view?id=1407
[13] https://www.councilofnonprofits.org/civicrm/mailing/view?id=1167
[14] https://www.washingtonpost.com/opinions/the-house-tax-bill-unleashes-a-dangerous-avalanche-of-campaign-cash/2017/11/18/203707fc-c8b6-11e7-8321-481fd63f174d_story.html?utm_term=.a814cf25913f
[15] https://www.councilofnonprofits.org/civicrm/mailing/view?id=1080
[16] https://www.councilofnonprofits.org/civicrm/mailing/view?id=1029
[17] https://www.taxpolicycenter.org/taxvox/house-tax-bill-not-very-charitable-nonprofits
[18] https://thehill.com/opinion/finance/359330-theres-a-wolf-in-sheeps-clothing-hiding-in-the-gop-tax-bill
[19] https://nonprofitquarterly.org/2017/11/06/good-bad-god-awful-nonprofit-bottom-lines-house-tax-bill/
[20] https://thehill.com/blogs/congress-blog/economy-budget/356400-a-very-unhappy-100th-birthday-for-the-charitable-deduction
[21] https://www.councilofnonprofits.org/civicrm/mailing/view?id=955
[22] https://www.councilofnonprofits.org/civicrm/mailing/view?id=863
[23] https://www.councilofnonprofits.org/civicrm/mailing/view?id=786
[24] https://www.councilofnonprofits.org/civicrm/mailing/view?id=677
[25] https://www.councilofnonprofits.org/contributing-centennial-celebrated
[26] https://www.councilofnonprofits.org/ambitious-congressional-agenda-confronts-obstacles-delays
[27] https://www.councilofnonprofits.org/nonprofits-foundations-show-support-charitable-giving-incentive
[28] https://www.councilofnonprofits.org/time-advocate-support-of-the-charitable-giving-incentive-100-years-of-giving-dc-fly
[29] https://www.councilofnonprofits.org/the-first-100-days
[30] https://www.councilofnonprofits.org/trends-policy-issues/tax-cuts-jobs-act-hr-1-house-tax-reform-bill
[31] https://www.councilofnonprofits.org/trends-policy-issues/tax-cuts-jobs-act-senate-tax-reform-bill
[32] https://www.councilofnonprofits.org/download-comparison-of-house-and-senate-tax-bills-and-impacts-nonprofits
[33] https://www.councilofnonprofits.org/article/charitable-nonprofits-foundations-agree-it-s-time-vote-no-the-house-tax-bill
[34] https://www.councilofnonprofits.org/article/last-minute-change-tax-reform-bill-hardens-nonprofit-opposition
[35] https://www.councilofnonprofits.org/article/house-tax-bill-gives-political-churches-multi-billion-dollar-payoff
[36] https://www.councilofnonprofits.org/article/nonprofits-nation-cannot-afford-proposed-tax-reform-plan
[37] https://assets.documentcloud.org/documents/4061881/Read-the-complete-Republican-tax-plan-released.pdf
[38] https://www.councilofnonprofits.org/article/national-council-of-nonprofits-statement-tax-reform-framework-s-potential-consequences-the
[39] https://www.councilofnonprofits.org/article/national-council-of-nonprofits-statement-proposed-tax-reform-outlines-effects-nonprofits
[40] https://www.councilofnonprofits.org/trends-policy-issues/comments-of-the-national-council-of-nonprofits-federal-tax-reform
[41] https://www.cbo.gov/ftpdocs/121xx/doc12167/CharitableContributions.pdf
[42] https://www.councilofnonprofits.org/trends-policy-issues-categories/federal-policy-issues
[43] https://www.councilofnonprofits.org/trends-policy-issues-tags/incentives
[44] https://www.councilofnonprofits.org/trends-policy-issues-tags/tax
[45] https://www.councilofnonprofits.org/trends-policy-issues-tags/tax-incentives
[46] https://www.councilofnonprofits.org/trends-policy-issues-tags/charitable-incentive
[47] https://www.councilofnonprofits.org/trends-policy-issues-tags/charitable-deduction
[48] https://www.councilofnonprofits.org/trends-policy-issues-tags/giving
[49] https://www.councilofnonprofits.org/trends-policy-issues-tags/donation
[50] https://www.councilofnonprofits.org/trends-policy-issues-tags/feldstein
[51] https://www.councilofnonprofits.org/trends-policy-issues-tags/itemized-deduction
[52] https://www.councilofnonprofits.org/trends-policy-issues-tags/cap-deduction