ECFA Urges Congress to Democratize Charitable Giving Incentives

 

On Giving Tuesday, hundreds of nonprofit leaders, including ECFA, urged Members of Congress to honor and incentivize giving by Americans of all income levels. Specifically, the coalition encouraged legislators to take action on the Charitable Act—bipartisan legislation that would reinstitute and expand the successful universal charitable deduction. 

While the long-cherished traditional charitable deduction remains a powerful giving incentive, it is limited to taxpayers who itemize their deductions—only about 12 percent of those filing. The Charitable Act is designed to recognize the generosity of more donors by providing non-itemizing taxpayers with the opportunity to claim a deduction worth up to one-third the standard deduction—roughly $4,600 for individuals or $9,200 for joint filers in 2023. 

“Our nonprofits provide our neighborhoods and families vital job training, compassionate homeless assistance, food in times of crisis, and spiritual counsel during our best and worst days,” said Senator James Lankford (R-Okla.) when introducing the bill earlier this year. “As Oklahomans and Americans donate their time, money, and resources to our nation’s nonprofits so they can serve people, they should be able to deduct more from their federal taxes as an incentive to financially support nonprofits since these services are often in place of government benefits.”

The Charitable Act is spearheaded by Sens. Lankford and Chris Coons (D-Del.) in the Senate and Reps. Blake Moore (R-Utah), Danny Davis (D-Ill.), Michelle Steel (R-Calif.), and Chris Pappas (D-N.H.) in the House of Representatives. The bill builds on a proven pandemic-era experiment that had allowed a $300 above-the-line benefit for donations ($600 for married couples filing jointly). That small step helped fuel much-needed increases in giving in 2020 and 2021. Indeed, IRS data for 2021 shows more than 47 million non-itemizing households using the deduction for donations totaling nearly $18 billion. Notably, more than one-fifth of those households were donors with adjusted gross incomes of less than $30,000.

Sadly, Congress allowed the experimental universal charitable deduction to expire at the end of 2021. This is particularly disappointing not only because many nonprofits nationwide are reporting significant declines in donation dollars, but also because America appears to be on a trajectory of fewer and fewer individuals giving to charitable causes at all. In its letter to Capitol Hill, the Charitable Giving Coalition—of which ECFA is a member—highlighted data showing a drop from two-thirds of households giving in 2000 to less than half of households doing so in 2018.

“This alarming data… reinforces the need for legislation like the Charitable Act to help reverse these trends and drive more dollars to the nonprofits serving our communities across the country,” the coalition wrote.

Churches and ministries that are members of ECFA know the value of individuals who give time and treasure to advance their Christ-honoring missions. Indeed, even amid warning signs for charitable giving nationally, we are encouraged by the extraordinary ongoing commitment of ECFA member donors that is evidenced in our soon-to-come 2023 State of Giving report (please sign up here for next week’s webinar releasing this report). 

We believe the government should honor and encourage all givers, so ECFA will continue to work with the Charitable Giving Coalition and other allies to advance this important legislation. 

 

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.