Hundreds of Nonprofits Push for Passage of Charitable Act

A coalition representing hundreds of organizations and companies in the charitable sector is urging Congress to permanently restore a charitable deduction for non-itemizers to address a “troubling long-term decline” in the number of Americans giving to charity.

In a letter to officials of the House Committee on Ways and Means and the Senate Committee on Finance, the Charitable Giving Coalition (CGC) asked Congress to pass the bipartisan Charitable Act (H.R. 3435/S. 566) in any 2024 year-end tax package and/or final 2025 tax reform package.

The bill would restore a charitable deduction for non-itemizers, this time allowing them to deduct up to one-third of the current standard deduction in charitable gifts annually.

Permanently enacting this legislation would help incentivize all taxpayers, “providing the same support for lower- and middle-income Americans to give more to charity that the tax code currently provides only to the more affluent,” the coalition said in its letter dated December 3, 2024.

Charitable deductions and TCJA impact.

A deductible charitable contribution is a donation to a qualified organization that is made within the tax year and meets specific requirements. Individuals currently must itemize to deduct their charitable contributions.

With over 1.7 million U.S. nonprofits that provide vital services essential to communities, the CGC said the charitable tax deduction “has encouraged Americans to give more of their income to the public good.” It cited an analysis by the Philanthropy Roundtable, which found that for every $1 increase in the tax benefit, charitable donations rise by a statistically significant $1.30.

However, because the Tax Cuts and Jobs Act (TCJA) significantly increased the standard deduction for 2018 to 2025, fewer taxpayers have been itemizing deductions, claiming the standard deduction instead.

“[F]ewer Americans now have access to the charitable deduction than at any time in its history,” the CGC wrote.

While the doubling of the standard deduction sought to simplify tax filing, the coalition said this has had “the unintended consequence of leading to a permanent reduction in charitable giving by American households who no longer itemize.”

‘Alarming’ trend.

The CGC cited several studies illustrating a decline in charitable giving in the U.S.

For one, the latest data from Giving USA showed that overall charitable giving in 2023 declined by an inflation-adjusted 2.1% as compared with 2022. The CGC said this “alarming” decline is the second consecutive year charitable giving failed to keep pace with inflation. The declines occurred even though almost every economic indicator was stronger in 2023 compared with 2022, it further noted.

Citing the American Enterprise Institute (AEI), the coalition also said the change in TCJA meant a reduction of $252 billion in itemized charitable contributions between 2018 and 2021.

Additionally, the AEI expressed concern that only the wealthy retain a tax incentive to give to charity since they are more likely to itemize.

Data from the Association of Fundraising Professionals’ Fundraising Effectiveness Project similarly “reinforces growing concerns that lower- and middle-income individual donors are disappearing from the U.S. charitable landscape,” the CGC said.

Temporary deduction for non-itemizers.

In 2020 and 2021, Congress enacted a temporary charitable deduction for non-itemizers to encourage donations during the coronavirus pandemic.

The deduction was capped at $300 for both individuals and joint filers in 2020. For joint filers, the cap was doubled for 2021 to $600.

This helped increase giving, particularly through a significant increase in small gifts. However, the number of small-gift donors then “declined dramatically” after the temporary deduction expired in end-2021, the CGC said.

Call to action.

The CGC asked Congress to support a “proven solution” — the Charitable Act — as it considers tax reform and extending or modifying aspects of the TCJA. The call comes as many of the provisions enacted by the TCJA are set to expire at the end of 2025.

“As the data from 2020 and 2021 help demonstrate, Congress can take a major step to strengthen giving and protect America’s culture of generosity by including a charitable deduction for non-itemizers in its final 2025 tax reform package,” the letter read.

The CGC noted that the Charitable Act enjoys strong support not only in both chambers of Congress but also from a wide cross-section of the charitable community.

In its letter, the coalition listed over 100 national organizations, two international organizations, and over 300 state and local organizations and other entities that it wrote on behalf of.

“Congress has a tremendous opportunity to help boost giving, reverse the decline in donors, and support the charitable organizations that are the backbone of our communities,” the CGC said.