Tax Incentive Encourages Charitable Giving

Tax Incentive Encourages Charitable Giving

The charitable tax deduction dates back to 1917. Its present-day form allows taxpayers to deduct donations to nonprofits and charities from their taxable income. In recent years, reductions to the deduction have been proposed in discussions regarding the federal budget. So far, the tax deduction for charitable giving has been preserved. Supporters point out that the deduction benefits those served by charities and other nonprofits. In a time of reduced government spending this support is more important than ever.

There aren’t hard facts about how giving would be affected if the charitable tax deduction were eliminated or reduced, but the majority of NAE members (63 percent) say that the charitable tax deduction does encourage them to give more. Thirty-six percent said no when asked whether the deduction encourages them to give more.

In July, the NAE and other nonprofit organizations and associations made the case to members of the Senate Finance Committee that the charitable tax deduction should be preserved since it advances important policy objectives, helps bolster the economy and makes the tax code fairer. The NAE also argued that the current deduction for charitable giving is not a drain on federal tax revenue, but a powerful human and financial engine for good in our society.   

For further reading:

Charitable Contributions 1979, National Association of Evangelicals, http://www.nae.net/government-relations/policy-resolutions/395-charitable-contributions-1979

Charitable Choice 2000, National Association of Evangelicals, http://www.nae.net/government-relations/policy-resolutions/102-charitable-choice-2000

“Charitable Giving Tied to State Tax Deduction Decisions,” Elaine S. Povich, The Pew Charitable Trusts (Sept. 24, 2013), http://www.pewstates.org/projects/stateline/headlines/charitable-giving-tied-to-state-tax-deduction-decisions-85899506837

“The Future of the Charitable Deduction,” Bruce Bartlett, The New York Times (Aug. 20, 2013), http://economix.blogs.nytimes.com/2013/08/20/the-future-of-the-charitable-deduction/?_r=1