Page 26 - July 2019 Conference Program Volume 42 No. 01

Tax Overhaul Could Mean $19

Billion Less in Donations Each

Year: Study

A study looked at ways to incentivize charitable giving by taxpayers who don’t itemize
deductions.

By Michael S. Fischer (BoardSource/ThinkAdvisor)

The sweeping tax overhaul passed in 2017 could result in 2.6 million fewer households making
charitable donations and $19.1 billion less donated each year through 2025, a study released by
nonprofit advocate Independent Sector finds.
The new tax law allows only those who itemize returns
to deduct their charitable gifts. It doubled the standard
deduction, greatly reducing the number of taxpayers
who itemize.
Independent Sector commissioned Indiana University
Lilly Family School of Philanthropy, in partnership with
the University of Pennsylvania’s Wharton School of
Business, to examine several policy proposals under
consideration by the nonprofit sector that could extend
charitable giving incentives to non-itemizers.
The report focuses on five policy options that aim
to offset the continued decline in donors, unequal
treatment of taxpayers’ charitable gifts in the tax
code and the potential decrease in charitable giving
resulting from the tax law.
“This research also includes an analysis of how much individual policy proposals could cost the
federal government in revenue, because we know it is a vital consideration for many advocates, and
we hear about it regularly from policymakers,” Dan Cardinali, Independent Sector’s president and
chief executive, wrote in a blog post.
“All five policy proposals could have an immense impact on American civil society, and their cost
estimates must be considered with that ambition in mind.”
The researchers found that all five policies could bring in more donor households, and four could
generate more charitable dollars than would be lost because of the tax changes:

1. Deduction identical to itemizers’ tax incentive

2. Deduction with a cap in which gifts over $4,000/$8,000 do not receive an incentive

3. Deduction with a modified 1% floor, in which donors can deduct half the value of a gift
below 1% of their income and the full amount if it is above 1%

4. Nonrefundable 25% charitable giving tax credit

5. Enhanced deduction that provides additional incentives for low- and middle-income
taxpayers
PAGE 24 | INLEAGUE League of Historic American Theatres