Tax Reform & the Charitable Deduction: What You Can Do to Protect Charitable Giving

Nina Deremer

A few weeks ago, I traveled to Washington, DC with the Charitable Giving Coalition to lobby on behalf of the charitable deduction in the face of tax reform. I was there with experienced lobbyists and long-time fundraisers and activists — all working together to urge members of Congress to protect the tax deduction given to charitable donors.

As a resident of Chicago, I met with the staff members of the House of Representatives and Senate who represent Illinois. We even got to meet Congressman Danny Davis (the representative of downtown Chicago and significant parts of the south and west side), as he walked in while we were meeting with his staff.

Tax reform proposals could eliminate the charitable deduction

The main take away from my day of lobbying was that tax reform is the main Congressional agenda item following healthcare reform. At the time, they were not sure that this issue would see any movement before the main spring recess. Now, however, with the closure of the healthcare debates, tax reform is next up for debate.

The primary plan on the table offered by House Republicans removes the corporate income tax (currently at 35%) and replaces it with a 20/25% destination-based cash-flow tax, which is meant to reduce incentives for businesses to move things offshore. President Trump’s plan, put forward during his campaign, would also reduce the corporate tax rate, as well as limit the number of taxable income brackets to 3.

While no one has made it a part of their platform to cut the charitable deduction, continuing to finance the deduction could be a problem. With the proposed cuts, the federal government will simply not be collecting enough money to continue with other tax benefits.

Why does the charitable deduction matter?

In 2015, Americans gave more than $265 billion to charitable institutions. Both the Trump plan and The House Republican Blueprint plan will reduce the number of people who itemize on their taxes, meaning the charitable deduction would not be available to 95% of Americans. It’s estimated that the current tax reform proposals could reduce charitable giving by as much as $17 billion. To learn more, read the Charitable Giving Coalition’s position paper.

As stated by the Charitable Giving Coalition, charitable giving “supports nearly every facet of life in our communities: education, research, health services, housing and shelter, job training, arts, culture, environmental protection, historic preservation, civil rights, civic engagement and more.”

As fundraisers, activists, and care providers it is crucial to educate ourselves on the impact of changes in how our work is funded. The proposed changes to the tax code will dramatically impact that funding and it is up to us to ensure that these changes aren’t made without our feedback and stories.

How can you help?

Having never done anything close to lobbying, I was initially intimidated to speak in those meeting rooms. But as I thought about the nonprofits I help every day and the crucial work they do, I found my voice.

You can make your voice heard too! Here are some ideas from the Charitable Giving Coalition on how you can get involved:

  • Contact your representatives. Both in the House and the Senate.
  • Tell stories about your work. Send stories to your representatives about your work. Be sure to illustrate how that work would be impacted by cuts in funding opportunities.
  • Write about your stance. Blog about the issue or write a letter to the editor of your local paper about the proposed tax reforms and how they will affect nonprofits — and the impact it will have on your organization.
  • Leverage social media. Spread the word on social media using the hashtags #protectgiving and #100yearsofgiving.

According to the Congressional staff I met with, the best way to make an impact is to make it personal. Think about the story you would tell that would best illustrate why you do what you do and reach out. Give you representative something to read on the floor so that we can preserve and expand the charitable deduction.

Together, we can protect the charitable deduction and support nonprofits across the country. For more information on getting involved, check out this guide from the Charitable Giving Coalition.

Leave a Comment