For years, Americans have utilized the charitable tax deduction as an incentive to give generously to a variety of charities. In fact, this year is the 100th anniversary of the deduction, which was established during World War I when policymakers were concerned that support for the war effort could put charities out of business.
As new tax policies to stimulate economic growth are considered, there is renewed concern about the impact of these policies on charitable giving.Currently, the charitable tax deduction is available only to those who itemize their taxes, which has traditionally been used by households with higher incomes. Proposals to double the standard deduction and simplify tax brackets will reduce the number of taxpayers who itemize.
A study commissioned by Independent Sector and Leadership 18 from the Indiana University (IU) Lilly Family School of Philanthropy shows that those changes could decrease charitable giving by an estimated $13.1 billion per year, which could have a significant impact on organizations like Volunteers of America.
In 2015, Americans gave an estimated $265 billion to charity. That year, Volunteers of America received in excess of $6 million in charitable donations, dollars that went toward programs for some of America’s most vulnerable populations: homelessness services ($2 million), elderly services ($1.5 million) and children’s services ($1.2 million).
With federal and state allocations for human services often the first to be cut as part of budget reduction efforts, we have become increasingly dependent on private fundraising to sustain our services. Every cent we raise is maximized to support vital safety net programs that are highly effective at reaching those who need them most.
Just like tax policy was created during World War I to answer a specific need, we see the opportunity now as tax reform is on the agenda to make changes that could encourage more people—specifically, people who do not currently have access to the charitable deduction—to give more.
The easiest way to accomplish that is to make the charitable tax deduction universal and available to all taxpayers, including those who don’t itemize. By making charitable giving available to all, the incentive to give will not just be preserved, but will also be strengthened. According to the Indiana University study, this simple change could potentially increase charitable giving by up to $4.8 billion per year.
A 2017 poll conducted by Independent Sector found that 85 percent of American voters support protecting the charitable tax deduction and 75 percent support expanding the charitable deduction to all taxpayers.
As an organization founded more than 120 years ago and dedicated to reaching and uplifting the American people, Volunteers of America is committed to using the resources available to improve the lives of others. With the support of giving enhanced through the charitable tax deduction, we can continue to serve in partnership with all Americans in this endeavor.
Mike King is national president and CEO of Volunteers of America and a member of Leadership 18, a coalition of human service sector nonprofits dedicated to preserving and enhancing the charitable tax deduction.
The views expressed by this author are their own and are not the views of The Hill.
An incentive to give – helping America help itself – The Hill (blog)