The Charitable Giving Coalition sent the following letter to Ways and Means Chairman Jason Smith (R-MO) and Ranking Member Richard Neal (D-MA), and Senate Finance Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) in support of the Charitable Act. You can find a PDF of the letter here.
Today is Giving Tuesday. In recognition of this date, the Charitable Giving Coalition (CGC), a diverse group representing thousands of charitable and faith-based organizations across the country, writes to you in support of the Charitable Act (H.R. 3435, S. 566), bipartisan legislation that would restore and expand the charitable deduction for non-itemizing taxpayers, also known as the universal charitable deduction.
Giving Tuesday was created in 2012 as a simple idea: a day to encourage people to do good and make giving more central in daily life. Ten years later, it has since become a network of local leaders in over 80 countries as a global movement to reimagine a world built upon shared humanity and radical generosity. In 2022, an estimated $3.1 billion was donated in twenty-four hours in the U.S. alone, a 15 percent increase over the prior year and a 25 percent increase since 2020. This is the latest example of America’s long culture of giving to benefit others.
However, this American tradition is at risk. Currently, 88 percent of charitable giving is provided by 13 percent of donors. The bipartisan Charitable Act would encourage more giving from middle-income and lower-income families that are not incentivized to give through the charitable deduction since they do not itemize.
In 2022, charitable giving fell to $499 billion, a 10.5 percent inflation-adjusted decline (a 3.4 percent decline in current dollars) and the largest year-over-year decline in total giving since Giving USA began tracking it in 1956. While all categories of charitable giving – individual, foundation, bequest, and corporate – experienced declines after adjusting for inflation, individual giving had the largest drop of 13.4 percent.
Data from this year signals this troubling downturn could worsen, as the Association of Fundraising Professionals’ Fundraising Effectiveness Project found declines in both charitable giving (.7 percent) and the number of donors (3.8 percent) in the first quarter of 2023 compared to the first quarter of 2022.
This alarming data, coupled with the steady decline in the percentage of Americans giving to charity from two-thirds of households in 2000 to just less than half in 2018, according to the Indiana University Lilly Family School of Philanthropy, reinforces the need for legislation like the Charitable Act to help reverse these trends and drive more dollars to the nonprofits serving our communities across the country.
Giving trends from 2020 and 2021, when the temporary non-itemizer charitable deduction was in place, indicate the deduction works. According to the Fundraising Effectiveness Project, charitable gifts of $300 – the cap of the temporary deduction in 2020 – increased by 28 percent on the last day of the year. Furthermore, interim Internal Revenue Service data for tax year 2021 shows 47 million households used the non-itemizer charitable deduction for donations totaling around $18 billion. A higher deduction cap, as included in the Charitable Act, would encourage even more charitable giving in communities across the country.
The charitable deduction is sound tax policy. It encourages individuals to give away more money to charity than they otherwise would, as evidenced by a recent Independent Sector poll that found 53 percent of respondents said they would give more to charity if they were able to claim a charitable deduction for it. Unfortunately, the current charitable deduction is only available to those who itemize, allowing only about 10 percent of taxpayers to access it.
Despite declining donations, the sector continues to be called upon to do more. From natural disasters and economic hardship at home to unrest and suffering abroad, America is facing unprecedented challenges that nonprofit services can and do help to address. Congress can boost the sector’s capacity to serve communities and help those who need it most by restoring and expanding the universal charitable deduction, which encourages all Americans, regardless of income, to give more to charity.
The bicameral and strongly bipartisan Charitable Act is a step in that direction. If enacted, the bill would restore the non-itemizer charitable deduction and increase the amount taxpayers could deduct to one-third of the standard deduction, approximately $4,600 for individuals and $9,200 for joint filers. The legislation would also make gifts to donor-advised funds, which have proven to be nimble in times of crisis, eligible for the universal charitable deduction. We encourage you and your colleagues to renew and expand the non-itemizer universal charitable deduction this year.
Thank you for your leadership and your commitment to America’s charitable community.
Sincerely,
Charitable Giving Coalition