Charitable giving is at risk

Tomorrow is Giving Tuesday, a day when charities across the country raise the money that sustains their efforts to help those most in need – whether that need is for a college education or workforce training, for food and a safe place to sleep, for addiction treatment or for dental care. If Congress has its way, those charities are going to be in a world of hurt as the charitable deduction so many charities rely on to spur donations comes to an effective end if the tax reform bill passes in its current form.

The Tax Cuts and Jobs Act eliminates a number of deductions and credits while doubling the standard deduction, a move that is intended to both simplify tax returns and lower the amount of taxes owed – at least for some individuals. While the bill keeps the charitable deduction – which has existed for 100 years – many fewer individuals will choose to itemize since they would lose other deductions and credits – like those for tuition, medical expenses and payment of state and local taxes. National estimates project that 95% of taxpayers who currently itemize their deductions (including the charitable deduction) will no longer do so once the other deductions and credits are deleted. A study by the Tax Policy Center estimates that charities would lose between $12 and $18 billion next year because of the tax bill’s effective elimination of the charitable incentive for donating to nonprofits. Here in Ohio, that 95% gave almost $4 billion in 2015, an amount that would be at risk of dramatically decreasing if the incentive for giving goes away. And, not only would thousands of charities and those they serve be impacted by such a reduction, so would Ohio’s economy, since almost 12% of the workforce is employed by a nonprofit.

There is a way to offset – at least partially – this anticipated decrease: create a universal deduction for gifts to charity, similar to the deduction enacted in the 1980s. In fact, HR 3988 proposes doing so, allowing all Americans to deduct their charitable donations without itemizing. We call upon Senators Portman and Brown to offer this as an amendment as the bill moves to the Senate floor.

It is critical to recognize that philanthropy cannot fill the needs – here in Ohio or nationwide – created as a result of the many provisions negatively impacting charitable giving and low- and middle-income workers and families. Ohio’s foundations, United Ways and other public charities gave over $2 billion to nonprofits in 2015, the highest on record, but it’s insufficient to fill anticipated gaps if the tax reform bill passes in its current form.

Claudia Y.W. Herrold