Tax Bill Will Hurt Charities Throughout San Diego County

Wednesday, December 6, 2017

By Ryan Ginard, Director of Strategic Advancement

San Diego Grantmakers has serious concerns about both of the recently passed versions of the House and Senate tax proposals because we believe they would cause significant harm to charitable giving across the San Diego region and to those that philanthropy often seeks to serve —low- and middle-income workers and families.

As we are reminded at this time of year, Americans are generous people. Every year we donate billions to charities including hospitals, schools, feeding programs, veteran’s organizations, museums, community projects and civic institutions. No other country in the world is so generous.

But current tax reform proposals in Congress threaten this American tradition of giving. 

That’s because the tax bills that just passed in the House and the Senate fails to preserve the charitable deduction—which has existed for 100 years to incentivize giving in America. Both bills would result in the charitable deduction no longer being available to 95% of all taxpayers because of the proposed expansion of the standard deduction.

A new study by the Tax Policy Center estimated that charities would lose between $12 billion and $18 billion next year because of the tax bill’s effective elimination of the charitable incentive for donating to nonprofits. A study by the Indiana University Lilly Family School of Philanthropy found similar drops in giving.

In California, over 5 million people claimed the charitable deduction accounting for $31.5 billion dollars deducted [1].  A 5% loss resulting from tax reform would mean $252 million less to fund private food banks, homeless or domestic violence shelters, provide day care, or job training. Nonprofits’ tight budgets mean lost dollars translate directly to reduced services for our communities.

This significant loss of charitable contributions would also lead to the loss of thousands of nonprofit jobs.

This significant loss of charitable contributions would also lead to the loss of thousands of nonprofit jobs. The nonprofit sector is our country’s third-largest workforce, employing 10% of all workers [2]. In San Diego, the nonprofit sector employs over 115,000, contributing $6 billion in total wages to the region [3].

We call members of the conference committee to support including a universal charitable deduction in the current Senate tax-reform bill and reject any changes to the Johnson Amendment during these negotiations. This will ensure taxpayers at all income levels are able to take advantage of this 100-year-old charitable giving incentive and that we protect nonprofit nonpartisanship. Without these measures, charitable giving could decrease dramatically and nonprofits could become politicized with devastating impact on the many Americans helped by charities every single day in every corner of our region.

Now more than ever, we need to be encouraging more giving, not less.

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