The sweeping tax overhaul passed in 2017 could result in 2.6 million fewer households making charitable donations and $19.1 billion less donated each year through 2025, a study released by nonprofit advocate Independent Sector finds.
The new tax law allows only those who itemize returns to deduct their charitable gifts. It doubled the standard deduction, greatly reducing the number of taxpayers who itemize.
Independent Sector commissioned Indiana University Lilly Family School of Philanthropy, in partnership with the University of Pennsylvania's Wharton School of Business, to examine several policy proposals under consideration by the nonprofit sector that could extend charitable giving incentives to non-itemizers.
The report focuses on five policy options that aim to offset the continued decline in donors, unequal treatment of taxpayers' charitable gifts in the tax code and the potential decrease in charitable giving resulting from the tax law.
"This research also includes an analysis of how much individual policy proposals could cost the federal government in revenue, because we know it is a vital consideration for many advocates, and we hear about it regularly from policymakers," Dan Cardinali, Independent Sector's president and chief executive, wrote in a blog post.
"All five policy proposals could have an immense impact on American civil society, and their cost estimates must be considered with that ambition in mind."
