Charitable Giving and Tax Incentives

Abstract

Over $400 billion were donated to nonprofits in 2017, a record high. However, despite the increases in charitable dollars, the share of households that donate has been declining: in 2000, 67 percent of American households donated to nonprofits, but in 2014, only 56 percent of American households donated. This trend in decreasing donors pre-dates the passage of the 2017 Tax Cuts and Jobs Act (TCJA), but could be accelerated by the recent policy changes. TCJA significantly changed federal tax policy and these changes are expected to affect charitable giving [3-5]. Nonprofit leaders, as well as policymakers, have been exploring additional policy proposals to offset the potential negative impact on charitable giving.