The charitable tax deduction is 100 years old. Yes, 100 years old. It was enacted in 1917 to encourage private philanthropy after individual income taxes were increased to help pay for the United States’ effort in World War I. As we look back on these last 100 years of giving, it’s important for us to understand where we stand today.
With the White House and Congress under control of the same political party, meaningful tax reform is a possibility for the first time since 1986. Currently, tax reform is being discussed in both the U.S. House of Representatives and the U.S. Senate by the House Committee on Ways and Means and the Senate Committee on Finance.
As our elected officials discuss and debate various tax reform proposals, it is important that the full scope and value of the charitable tax deduction be preserved and that charitable giving, in general, be encouraged. It is a way for our nation to support and encourage the generous spirit of its people and ensure that funding continues to flow to organizations that offer a tremendous return on this charitable investment. Although we all know there are many reasons why individuals give to organizations and causes, we can’t overlook the impact that the charitable tax deduction has had on the nonprofit and foundation sector.
What can you do to better understand the charitable tax deduction legislation?
1. Educate yourself on the implications of tax reform on charitable giving. Of the many provisions being discussed, three could impact the social sector:
- Reduction in income tax brackets
- The doubling of standard deductions
- The repeal of the estate tax
2. Take a look at the universal charitable deduction. Groups and associations across the social sector have proposed this measure to increase charitable giving across all taxpayers and potentially minimize any negative impact of tax reform on charitable giving. This provision would give a charitable tax deduction to all taxpayers regardless of their itemization status.
3. Contact your elected officials and let them know of your interest in this issue. At our core, we are participatory government and our Representatives and Senators need to know what their constituents think about the issues on which they vote.
4. Follow your representatives on social media. This is especially important if you don’t always agree with their policy stances or know their positions on tax reform and the charitable tax deduction. As someone who recently started following her own elected officials on social, I’ve found you can learn a lot about their positions this way. Sign up for their e-newsletter, if they have one. Stay informed.
5. Subscribe to updates on the issues. Several organizations are tracking tax issues and providing legislative updates. Check out the following groups, subscribe to their updates, and involve yourself in the conversation:
- Alliance for Charitable Reform
- National Council of Nonprofits
- Charitable Giving Coalition
- Independent Sector
- Council on Foundations
- Regional and mission-specific associations
What will we do to help ensure that charitable giving is encouraged?
We will continue to monitor and be involved in the conversation around tax reform, the charitable tax deduction, and, in particular, the call for a universal charitable tax deduction.
We will participate in “Capitol Hill Fly-Ins” hosted by the Charitable Giving Coalition and other social sector organizations— educating our elected officials on the great work the social sector does day in and day out to make our communities better places for all of our residents.
We will also continue to support and share updates from the other organizations that are leading knowledge-sharing on this issue, including Alliance for Charitable Reform, National Council of Nonprofits, Charitable Giving Coalition, Independent Sector, and Council on Foundations.
To learn more about the implications of tax reform on the charitable tax deduction and best practices to shore up your fundraising and engage your supporters, download Blackbaud’s Charitable Tax Deduction white paper.