How The Nonprofit Sector Lost Out On $17 Billion In The Soon-To-Lapse Charitable Deduction Act
In a giving season when many smaller and medium-sized nonprofit organizations wonder about how to retain and expand their small-dollar donors in relation to stagnant donations, perhaps one of the more salient solutions is about to expire. House Resolution (H.R.) 3435, better known as the “Charitable Act,” (see also S. 556) is soon to meet its demise via legislative purgatory. The Charitable Act, which organizations such as Independent Sector cite as a valuable opportunity to spur increases in giving, will soon expire with a less than 1% chance of passing, according to GovTrack.
The bill would have increased the standard deduction for tax filers that do not itemize taxes to approximately $4,000, giving the 87% of U.S. taxpayers who do not itemize their tax returns access to the same benefits of donating to charity that wealthy donors employ (according to IRS data 2019 - TY Tony Martignetti for the link check).
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For now though, the standard deduction remains at $300/$600 as the standard deduction for charitable giving. This is well below the average amount that Americans across all income ranges give according to data from the IRS.
Let’s put this another way, when Warren Buffett donated $51 billion last year, and because he had access to expensive tax experts who could itemize his return, he got the full deduction in his taxes for charitable giving. But Buffy (not a real person but a heck of a vampire slayer) who donated $1,000 and didn’t itemize their return (just like the overwhelming majority of Americans), only got $300 of the donation taken off their tax bill. In a tax system that intentionally perpetuates complexity, this inequitable access to deductions is particularly painful for a nonprofit sector desperately trying to maintain its grassroots donors.
Firespring Director of Nonprofit Solutions & StoryBrand Certified Guide I educate, coach, and guide nonprofit leaders to market their organizations using websites, printing and strategic marketing for maximum impact.
11moThis is infuriating.
Instructional Design and Leadership Development for Nonprofits and Associations | Top 2.5% Podcast | Speaker | Writer
11moWow! This is huge!
Helping nonprofit execs diversify revenue & scale gen-ops dollars so they can invest in infrastructure to grow.
11moGreat recap....and this is plain wild. So unfortunate.
The evangelist for Planned Giving. With 27 years of planned gift fundraising training, speaking, and consulting. I also host Tony Martignetti Nonprofit Radio podcast. My years of stand-up comedy and improv emerge.
11moThe expiration is inequitable and unfortunate. Period. There is a bright spot here thinking deeper, and it confirms the generosity I've talked about for a few decades. The average American doesn't give to nonprofits to get the charitable deduction. The vast swath of us, borne out in your article, are giving way more than we're getting. Many of the non-itemizers are giving, on average, a lot more than they're getting back deduction-wise. And they give anyway. That lifts me.