National Conversations Ongoing on Impact and Potential Fixes to Charitable Giving After Federal Tax Reform

Monday, June 18, 2018

Leaders in the independent sector have been heavily focused on the impact on tax reform on charitable giving ever since the 2017 tax reform conversations began. The expectation is that the 2017 tax reform will negatively impact charitable giving since fewer taxpayers will have the incentive of the charitable giving deduction. Those on the very high-end of the wealth scale will also be less motivated to make legacy gifts, given the raised cap on the estate tax exemption.

So how bad will the impact be on charitable giving? And what is the 'fix' to strengthen giving incentives in the future?

Getting Data on the Impact on Charitable Giving

A key action for the sector as a whole is to gather data to demonstrate the impact of the tax bill on charitable giving. The Charitable Giving Coalition has developed a tax reform survey to start to understand how tax reform is impacting nonprofits. MCF encourages its members to share this survey with grantees, with responses requested by July 13. This information will be used to communicate with policy makers, including members of Congress, about how the tax changes are affecting giving and whether or not additional legislation is warranted to correct problems and help increase giving. The Charitable Giving Coalition needs both quantitative responses (numbers and percentages) as well as qualitative responses to help frame giving and service challenges in our communities.

ACTION: Share the tax reform survey with grantees: 

The Proposed Fix - A Universal Charitable Deduction

Leaders in the philanthropic and independent sector propose fixing the anticipated decline in giving by adopting a universal charita­ble deduction to reverse the impact of expanding the standard deduction. During the tax reform debate, bills were introduced in both the House and the Senate proposing the universal deduction, an above-the-line deduction available to all taxpayers, as an alternative. However, the idea was brought into the process too late to build a broad base of support, and by the time it was starting to be taken seriously, it was perceived as too costly to be easily incor­porated into the nearly finished bill.

MCF is working with our national advocacy partners to garner support from Minnesota's Congressional delegation for two different versions of a universal charitable giving deduction bill [Universal Charitable Giving Act, HR 3988/S 2123 & Charitable Giving Tax Deduction Act, HR 5771). Building support and gather co-sponsors prior to a tax reform fix bill is important so that the independent sector's voice can be prepared and heard as Congress considers future tax fixes, likely after the 2018 midterm elections.


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