Philanthropy experts predicted that the Tax Cuts and Jobs Act of 2017 would cause a big drop in charitable giving.
The Indiana University Lilly Family School of Philanthropy published a study in May of that year projecting that tax changes would depress giving by some $13.1 billion annually.
The particular concern was that many tax return itemizers would decrease their giving because of the doubled standard tax deduction.
But giving actually increased in 2018, according to an article by the Chronicle of Philanthropy.
Does this mean reports of the tax reform’s expected impact were greatly exaggerated?
Probably not. I see several points from the Chronicle’s report that indicate a trend toward decreased giving in 2019.
2018 Charitable Giving Highlights
- While giving rose 1.6% in 2018, it did not keep pace with inflation and did not match the 2% increase of 2017.
- Smaller gifts of $250 to $999 went down by 4% although contributions of $1,000 grew by 2.6%.
- New gifts dropped by 7%.
- Second gifts to organizations, which is a sign of donor retention, dropped by 15%.
The data comes from the Fundraising Effectiveness Project 4thQuarter Report, a collaboration of the Association of Fundraising Professionals and the Urban Institute. The study tracked giving from over 4,500 charities.
These early 2018 results suggest that small givers (the $250-$999 range) were impacted by the new tax law and decreased their giving. In contrast, larger givers ($1,000 and above) sought to increase their giving to move above the higher deduction limits.
These results track my blog of earlier this year suggesting 2019 giving trends.
Now that Tax Day 2019 is in the books, U.S. taxpayers have all had the chance to see how they were affected personally by the tax changes.
We may well see a further decline in 2019 as some donors now have realized that the contributions they used to itemize fall well below the increased standard deduction.
Expect the rest of this year to more accurately indicate the full impact of tax reform on charitable giving.
Photo by Kelly Sikkema on Unsplash
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Published May 7, 2019
Topics: Giving Trends