New Studies Hint at Impact of Federal Tax Reform on Giving

Tuesday, February 26, 2019

With 2018 wrapped up, data is starting to become available to help understand the impact of the 2017 tax change on charitable giving. This data should be viewed with some caution, as many experts are saying we'll likely see the real impact starting next year, once people have had a chance to file their 2018 taxes and have a better understanding of how the new tax law impacts them.

Two new studies, one by Blackbaud Institute for Charitable Impact and the other by The Fundraising Effectiveness Project, focus on 2018 charitable giving. While numerically overall giving is shown to have increased in both studies, it has not kept up with inflation, and there are additional indications in both studies that the tax law is having an impact on giving.

The Blackbaud study shows that giving to smaller nonprofits [under $1 million] was down 2.3% in 2018, and the percentage of giving happening in December has declined. The results of the Fundraising Effectiveness Project, written up in the Chronicle of Philanthropy, show that gifts under $1000, new donors, and donor retention are all down in 2018. Gifts over $1000 are slightly up.

This early data hints at the impact of the tax law -- and raises concerns that small and medium sized donors may be changing their giving behavior. MCF will continue to monitor and share this type of data and will bring this conversation to Minnesota's Congressional delegation when attending Foundations on the Hill in March. MCF favors a universal charitable deduction so that everyone has an incentive to give to charity. 

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