2018 Will Be ‘Unusual’ Year for Philanthropy: Report

Despite the change, the report says, some analysts have suggested that the tax law could stimulate foundation giving, thanks to its potential to facilitate the growth of stock portfolios and corporate income. In this event, payout requirements could result in increased grant making in the future.

The report’s “uneven growth” scenario posits that tax policy changes would primarily benefit corporations and wealthy business owners, with minimal trickle-down effects. Although different types of charities would be affected in different ways, estimates for total giving would hold steady.

“The predicted decline in individual giving as a result of tax policy changes is likely to primarily impact organizations middle-income Americans support, such as local charities, congregations and basic needs organizations,” Philippe Hills, president and chief executive of Marts & Lundy, said in the statement.

“These charities could be affected more than large arts organizations and educational institutions that have the resources to more fully engage wealthy donors,” many of whom are generally expected to continue itemizing their deductions.

The report says aggregate giving estimates would mask much of this disparity. It notes that wealthy households already make up such a big portion of individual giving that with enough economic growth, individual giving would increase even if concentrated almost entirely among these households.

In the “flat growth” scenario, tax policy changes would have little effect on economic growth, and donors may adapt to tax policies with fewer gains to the charitable sector, preventing the economy from realizing the full benefits of tax law adjustments. Under these circumstances, the report says, broad implications for charitable giving are difficult to ascertain.

“While the economy should remain an encouraging factor for charitable giving, changes to the federal tax code actually reduce financial incentives for many Americans when it comes to philanthropic gifts and this could result in a sharply different outlook for charities’ fundraising this year,” Hills said.