Charitable giving by individuals down in first year under Trump’s tax law: study

Charitable giving by individuals declined in 2018 amid a complicated climate for donations to nonprofits that included tax-code changes in President Trump’s 2017 law, according to a report released Tuesday.

Giving by individuals declined by 1.1 percent without adjusting for inflation and by 3.4 percent after adjusting for inflation, according to the report, which was published by Giving USA Foundation and was researched and written by Indiana University’s Lilly Family School of Philanthropy.

{mosads}The authors of the report said several competing factors may have influenced charitable giving in 2018. While the strong economy may have been beneficial to giving, the stock-market decline toward the end of the year, when many people make the bulk of the their donations, could have dampened donations. Additionally, the new tax law may have caused changes to individuals’ giving behavior, the authors said.

Much of Trump’s 2017 tax-cut law took effect for 2018, including its significant increase in the size of the standard deduction. Because the standard deduction is now larger, more taxpayers are taking the standard deduction, which means that fewer people are claiming the itemized deduction for charitable contributions and receiving a tax break for their donations.

“As we’ve seen in previous years, the strong economy had a positive influence on individual giving; however, these positive effects may have been tempered by policy changes and other factors to create a more mixed picture for giving in 2018,” Una Osili, an associate dean at the Lilly Family School of Philanthropy, said in a news release. “About half of all Americans give, and the tax policy changes may have created uncertainty for some donors, especially those who previously itemized but no longer will.”

Some lawmakers on both sides of the aisle have been concerned that the 2017 tax law will lead to less charitable giving, and have proposed legislation to create a charitable deduction that individuals can take even if they don’t itemize their deductions.

Lawmakers have also asked Treasury Secretary Steven Mnuchin about receiving IRS data on the impact of the tax law on charitable giving. Mnuchin said at a Senate Appropriations subcommittee hearing in May that it was too early to tell what the impact was but that he was hopeful that giving didn’t decline and hoped to have data in a few months.

Those closely watching the tax law’s impact on donations say it could take several years to determine the ultimate impact that the tax law has on charitable giving.

While giving by individuals declined in 2018, giving by corporations and foundations increased, the report found.

Total charitable giving increased by 0.7 percent in 2018 without adjusting for inflation and declined by 1.7 percent after adjusting for inflation. The inflation-adjusted donation amount was the second highest-level ever, after 2017, according to the report.

“The complexity of the charitable giving climate in 2018 contributed to uneven growth among different segments of the philanthropic sector,” said Lilly Family School dean Amir Pasic. “Growth in total giving was virtually flat. Contributions from individuals and their bequests were not as strong as in 2017, while giving by foundations and corporations experienced healthy growth.”