CGC: Congress Can Enact a Tax Provision that Would Expand Charitable Giving
WASHINGTON, D.C.— Tomorrow, as the Senate Finance Committee conducts a hearing on Tax Reform with Treasury Secretary Steven Mnuchin, the Charitable Giving Coalition (CGC) strongly urges committee members and the Secretary to consider a universal charitable deduction that would be available to all taxpayers.
A recent study commissioned by Independent Sector and conducted by Indiana University Lilly Family School of Philanthropy* calculated that a universal charitable deduction could increase charitable giving by $4.8 billion per year. A universal charitable deduction would allow any taxpayer to claim a charitable deduction, whether they itemize or take the standard deduction. It simplifies the tax code and promotes fairness.
“A universal charitable deduction simplifies the tax code and promotes fairness,” stated Brian W. Walsh, executive director of the Faith and Giving Coalition.
“This commonsense tax policy change would ensure that we preserve America’s longstanding tradition of philanthropic giving in the context of tax reform during a year when we are celebrating the 100th anniversary of the charitable deduction,” noted Steve Taylor, senior vice president and counsel for public policy of the United Way.
Enacting the universal charitable deduction is vital as the study analyzed the current tax reform plans from both Congress and the Administration and determined that these plans would significantly diminish charitable giving. According to the study, the current tax reform proposals would significantly decrease charitable giving by as much as $13.1 billion (4.6 percent). This decrease may be an unintended consequence of proposals to simplify individual income tax provisions with an increased standard deduction and a decreased top marginal rate. Nevertheless, the loss of over $13 billion in charitable giving will undoubtedly cause a crisis for America’s communities as the resources for services provided by charities decline.
The CGC supports efforts to make the tax code simpler and more efficient. However, it is concerned that there could be unintended consequences for charities if the number of taxpayers who itemize – and can take a charitable deduction – is reduced and giving declines. In response to that consequence, CGC proposes enacting (or expanding) a charitable deduction for all American taxpayers, whether they continue to itemize or take the standard deduction. Simply preserving the existing charitable deduction for itemizers is not enough. By most calculations, an expanded standard deduction will reduce the number of itemizers from one-third of taxpayers to only 5 percent. That translates to nearly 30 million taxpayers who will no longer have the charitable deduction. Because the deduction is a powerful motivator that often prompts larger charitable contributions, this dramatic decline in itemizers translates to a dramatic decline in giving.
Earlier this year, the Charitable Giving Coalition was motivated to propose a revised charitable deduction in response to Ways & Means Committee Chairman Kevin Brady’s (R-TX) call for tax reform ideas:
“We’re looking at ideas for how we can unlock more charitable giving. We are looking at ways we can encourage more small givers in charities, continue to encourage current givers, continue to unlock more charitable giving just throughout the economy” (Chairman Kevin Brady, January 25, 2017, Financial Services Roundtable)
The universal charitable deduction for all American taxpayers will retain – and unlock additional – charitable giving, helping to keep our charities and the communities they serve strong.
Our country has a long and proud history of charitable organizations building and supporting communities, and of individuals channeling their concerns, interests and passions to the causes they care about most. Charitable giving allows Americans to create, fund, and operate the institutions that are the fabric of our civil society. It supports nearly every facet of life in our communities: education, research, health services, housing and shelter, job training, arts, culture, environmental protection, historic preservation, civil rights, civic engagement and more.
The Charitable Giving Coalition is a unique, unified voice representing a broad cross-section of nonprofit organizations from across the country. Chaired by the Association of Fundraising Professionals, the coalition is comprised of more than 175 organizations, including individual nonprofit organizations, large national and international charities, faith-based organizations and several associations and umbrella groups that represent the charitable sector. It is dedicated to preserving a charitable giving incentive that ensures that our nation’s charities receive the funds necessary to fulfill their essential philanthropic missions.
*Tax Policy and Charitable Giving, Results, May 2017, Indiana University Lilly Family School of Philanthropy Study commissioned by Independent Sector. https://www.independentsector.org/wp-content/uploads/2017/05/tax-policy-charitable-giving-finalmay2017-1.pdf