Charities could be facing a serious drop in donations next year if the Republican tax bill passes, according to a memo from the Joint Committee on Taxation obtained by Jim Tankersley of The New York Times. The main culprit is the proposed increase in the standard deduction, which would result in fewer taxpayers taking itemized deductions.
While the current version of the tax bill maintains the deduction for charitable donations, taxpayers need to itemize to take advantage of it, and charities are deeply worried that, with more people taking the standard deduction rather than itemizing, contributions will decline in both size and number. Una Osili, of the Lilly Family School of Philanthropy at Indiana University, told NPR that the GOP changes could lead to a reduction of up to $13 billion a year in charitable giving. She says that the 28 million American households that would no longer itemize aren’t going to stop donating to charity, but they’re likely to give less. Tim Delaney of the National Council of Nonprofits said this was a particularly worrisome development given the possibility that Congress may also cut social spending, placing a higher burden on charities just as donations lose some of their appeal through the tax code.
Those fears were reinforced by the JCT’s latest memo. The congressional tax scorekeeper estimates that, under current law, about 41 million donors will deduct charitable contributions of $241.1 billion next year. Under the GOP’s Tax Cuts and Jobs Act, the JCT estimates about 9.4 million donors would deduct charitable contributions of $146.3 billion.