During the Trump administration’s tumultuous first 100 days, U.S. charitable giving patterns changed, in some instances significantly, according to an analysis by Charity Navigator.
The president’s tax plan, rushed out April 26, got a cool reception from tax lawyers interviewed by The Chronicle of Philanthropy who said the plan was potentially damaging to nonprofit organizations that rely on charitable donations.
Charity Navigator, an online charity evaluator and itself a 501(c)(3) entity, said in a statement that during the past year, upward of 10 million people had read its ratings and evaluations of charities before making donations. Many donated directly from the site.
Last week, the organization released a review of donations made on its site between Jan. 20 and April 20, and compared those with donations made during the same period in 2016.
Certain charities experienced dramatic increases:
American Civil Liberties Union, up 8,000%
Southern Poverty Law Center, up 1,400%
Planned Parenthood, up 1,000%
American Refugee Committee, up 645%
Environmental Defense Fund, up 500%
At the same time, the review found that donations made on the site did not increase across all social action cause categories. Giving to some health- and disease-related organizations was flat or slightly lower than in 2016.
A recent report found that a big majority of U.S. grant makers expected philanthropy to play a significant role in society as a result of recent changes in Washington.
Lack of Specifics
Tax experts told The Chronicle that while the administration promised to keep the charitable deduction intact, other proposed changes in the tax code appeared to be at odds with the goals of preserving tax breaks for donations.
For one, an increase in the standard deduction would significantly limit the number of people who take a charity write-off. Only the richest 5% of Americans would have a tax incentive for making charitable gifts.
Many tax lawyers were particularly troubled that the tax plan was released before the administration had hired key tax policy officials at the Treasury Department and the IRS who ordinarily would provide input in crafting tax policy.
The dearth of specifics in the plan left both nonprofits and donors scratching their heads. For example, would Congress adopt a plan that seemed to erase tax incentives to give?
“It was a one-pager, double-spaced,” said Alexander Reid, a former lawyer for the congressional Joint Committee on Taxation who represents nonprofits. “We don’t have a lot of details.”
Robert Collier, president of the Council of Michigan Foundations, told The Chronicle that charitable gifts become smaller when donors lose the government as a partner that uses tax policy to encourage giving.
Collier pointed to a study that found that donors gave less following repeal of a state tax credit for gifts to community foundations.
The uncertainty has left charities on edge.
Mark Warren, a tax aide to Sen. John Thune, R-S.D., pointed to a factor that made it difficult to predict the effects of changes in the standard deduction.
In The Chronicle article, Warren said the thrust of the Trump tax plan was to increase economic growth, and doing so would help charities even if many fewer Americans took advantage of the charitable deduction.
Reid agreed, but said that even with more money in their wallets, donors would not give enough to make up for the loss of the tax incentive.
— Check out How Philanthropists Are Responding to Political Shift in DC on ThinkAdvisor.