U.S. House and Senate Introduce Bipartisan Legislation to Expand Charitable Giving

 

Brian Walsh, Executive Director, Faith & Giving Coalition

 

On March 9, a bipartisan group of U.S. Representatives and Senators introduced legislation to expand charitable giving by reducing the overall cost of giving for taxpayers. The Universal Giving Pandemic Response and Recovery Act (S. 618, H.R. 1704) would assist lower- to middle-income givers and the churches, ministries, and other charities they support.

Before 2020, only taxpayers who itemized on their year-end returns were eligible to claim a deduction for their charitable contributions. Those who itemize tend to be in the highest echelon of income earners. Further, Congress’s 2017 tax-code overhaul greatly reduced the fraction of taxpayers who itemize—down from about 3 of every 10 taxpayers to only about 1 of 10.

As part of its March 2020 pandemic relief package, Congress added to federal law for one year a charitable deduction for non-itemizing taxpayers—a so-called universal charitable deduction (UCD).  This initial UCD was capped at $300. Then in December, Congress doubled the cap to $600 for married couples and extended the UCD through 2021.

For the first time in about 35 years, federal law includes a (temporary) charitable deduction for non-itemizers. Efforts to enact this UCD during the pandemic were led by Senators James Lankford (R-OK) and Chris Coons (D-DE). This important step forward also is a result of education and advocacy by a very broad and unified coalition of faith-based and other nonprofit organizations, including support from ECFA.

Following the $300 universal charitable deduction going into effect last March, the Fundraising Effectiveness Project found that—as compared with the same quarters in 2019—charitable gifts of less than $250 increased in the second and third quarters of 2020 by 17.1 percent. While giving increased overall due partly to the crises, this great increase in small gifts reversed historical trends for crisis-related giving by far outpacing the increase in gifts of $250 or more.

The newly introduced Universal Giving Pandemic Response and Recovery Act would further strengthen the current UCD by:

  • Raising the deduction’s cap to over $4000 for individuals and over $8000 for married couples filing jointly.
  • Allowing non-itemizers to deduct cash gifts made to donor-advised funds (DAFs).
  • Extending the deduction through 2022.

The bill’s introduction in the House was led by Representatives Chris Pappas (D-NH-01) and Jackie Walorski (R-IN-02). Senators James Lankford (R-OK), Chris Coons (D-DE), Mike Lee (R-UT), Jeanne Shaheen (D-NH), Tim Scott (R-SC), Amy Klobuchar (D-MN), Susan Collins (R-ME), and Catherine Cortez Masto (D-NV) led the Senate introduction.

With the Senate divided 50-50, this strong bipartisan support is particularly noteworthy—as is the addition of Nevada Sen. Cortez Masto as an original cosponsor of UCD legislation. Sen. Cortez Masto is a Democratic member of the Senate Finance Committee, and the legislation now has the crucial support of one Democratic member and two Republican members (Sens. Lankford and Scott) of this key committee.

If you have a relationship with any of these Senators or Representatives, we encourage you to consider thanking them for their work to strengthen charitable giving to support the vital missions of churches, ministries, and other charitable organizations.

 

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.