Charitable Giving Data Draws Attention on Capitol Hill

Recent studies make a compelling case that nonprofits need further assistance from Congress as the pandemic’s economic impact continues.

One survey found that donations increased last year. Specifically, U.S. charitable giving increased 10.6% in 2020 compared to 2019, according to a recent Fundraising Effectiveness Project (FEP) report. This giving included huge upswings of new donors and recaptured donors. While major donors (those who gave more than $1,000 across 2020) made up the bulk of money given, surprisingly the biggest percentage increase came from donations of less than $250. The amount of people giving those small donations was up 15.3% from 2019.

Jon Biedermann, FEP’s chair, suggests that there could have been numerous factors for this increase in small donations, but that one correlation may lie with the new Universal Charitable Deduction instituted—at least temporarily—in last year’s pandemic relief law. The CARES Act brought several tax changes designed to help charities, including a temporary charitable deduction of up to $300 for taxpayers who don’t itemize their personal deductions."

"It's striking that on December 31, there was a 28% increase of $300 gifts, which is exactly the maximum amount a donor can take using the universal charitable deduction,” Biedermann said.

While that donor data bolstered the case for robust federal giving incentives, additional research showed some of the sobering downsides of the religious and charitable world during the pandemic. Donor retention was down, according to the FEP report, as fewer than 2 out of every 10 new givers in 2019 came back to the same charity in 2020. Another study showed a 7.4% decline in nonprofit jobs over 2020, with the biggest relative hit (34.7%) by the arts, entertainment and recreation, but also a smaller hit (10.1%) in the segment that covered “religious, grantmaking, civic, professional, and other,” according to a February 2021 study reported by the Johns Hopkins Center for Civil Society Studies.

Perhaps most foreboding was a series of scenarios mapped out in July 2020 with a median estimate that about 11% of nonprofits would close their doors, and in a worse-case scenario, more than a third of charities could shut down. That study came to the forefront in a report recently released by Candid and the Center of Disaster Philanthropy.

Lawmakers are taking note of the needs underscored by such data. Regarding the successful Universal Charitable Deduction, Sen. James Lankford (R-Okla.) recently introduced the bipartisan Universal Giving Pandemic Response and Recovery Act to extend and substantially bolster this tax incentive. Explaining the reason for his bill, Lankford said, In the last year, we have seen the powerful impact that nonprofits and houses of worship have on our communities and how they continue to help our neighbors in the toughest times. They are the local safety net when families need an extra hand.”

His colleague and top co-sponsor of the bill, Sen. Chris Coons (D-Del.), added, “People of all means want to be part of the solutions in their community—solutions often driven by charities and houses of worship—but our tax code ignores the giving of most Americans. If more Americans were acknowledged for and supported in their donations, there would be more giving, period.”

Of note, ECFA is supporting efforts to advance this bill as part of the Faith and Giving Coalition and the Charitable Giving Coalition.

Another bill in Congress to help charities is The Work Opportunities and Resources to Keep Nonprofit Organizations Well (WORK NOW) Act, which was recently re-introduced by Sen. Amy Klobuchar (D-Minn.). This legislation would essentially create a $50 billion federal grant program to help charities retain and create jobs. With the possibilities of grants of up to $3 million per eligible organization, observers project the bill could help roughly 17,000 nonprofits.

In a letter to congressional leaders on both sides of the political aisle, Klobuchar and her colleagues supporting the bill state, “Nonprofit caseloads have exploded during the coronavirus pandemic…. Unfortunately, charitable giving to smaller nonprofits (which account for 92 percent of nonprofit organizations) declined by over 7 percent last year. With decreased charitable giving and extraordinarily high community needs, nonprofits are being squeezed from all sides.”

So far all cosponsors of the WORK NOW Act are Democrat. Republicans have not openly objected, but it remains to be seen what modifications they may wish before it could be considered to move on its own or as part of a larger legislative package.

In the weeks ahead, ECFA will be closely monitoring these and other legislative efforts individually and in the context of larger infrastructure, tax, and any COVID-relief negotiations. In addition, ECFA continues to monitor the financial impact of the pandemic, such as conducting and releasing quarterly surveys through February 2021, available at ECFA.org/surveys.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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