Charities Seek Congress’ Support for Tax Deduction Incentives to Revive Giving

A coalition of nonprofits and businesses is urging Congress to address the alarming decline in charitable giving. The Charitable Giving Coalition (CGC) has called for the permanent restoration of a charitable deduction for non-itemizers through the bipartisan Charitable Act (H.R. 3435/S. 566).

Why the Charitable Act Matters

The CGC’s proposal aims to allow non-itemizing taxpayers to deduct up to one-third of the standard deduction for charitable gifts. This policy would encourage giving among middle- and lower-income Americans. The coalition argues that the current tax system favors wealthier donors, who are more likely to itemize deductions.

With over 1.7 million nonprofits in the U.S., the CGC emphasizes the vital role of charitable organizations in communities. Citing a study by the Philanthropy Roundtable, the coalition notes that every $1 increase in tax benefits results in a $1.30 rise in charitable donations.

TCJA and Its Impact

The Tax Cuts and Jobs Act (TCJA), enacted in 2017, doubled the standard deduction. While simplifying tax filing, this change reduced the number of taxpayers itemizing deductions, leaving fewer Americans with access to the charitable deduction.

Data from the American Enterprise Institute (AEI) shows this policy change led to a $252 billion reduction in itemized charitable contributions between 2018 and 2021. Moreover, the Association of Fundraising Professionals found that small-gift donors are vanishing, raising concerns about the future of charitable giving.

Decline in Giving: A Growing Concern

Charitable giving fell by an inflation-adjusted 2.1% in 2023, marking the second consecutive year it failed to keep pace with inflation, according to Giving USA. Despite strong economic indicators, donor numbers have continued to drop.

Temporary measures in 2020 and 2021, such as a $300 charitable deduction for non-itemizers (or $600 for joint filers in 2021), successfully boosted small-gift donations. However, this trend reversed when the deduction expired at the end of 2021.

A Proven Solution

The Charitable Act proposes a solution to reverse these declines. Supported by bipartisan lawmakers and over 400 organizations, the bill has broad backing. As key provisions of the TCJA are set to expire in 2025, the CGC is urging Congress to act swiftly.

By making charitable deductions accessible to all taxpayers, this legislation would restore a culture of generosity. It would empower nonprofits to continue providing essential services while encouraging Americans at all income levels to give.

Call to Action

“Congress has a tremendous opportunity to help boost giving, reverse the decline in donors, and support the charitable organizations that are the backbone of our communities,” the CGC emphasized in a letter to lawmakers.

The coalition is pushing for the Charitable Act to be included in year-end tax legislation or as part of the 2025 tax reform package. By doing so, Congress can ensure charitable giving remains a cornerstone of American society.

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