Over the past two weeks, there have been two major studies that show conflicting reports about the state of giving in America. Giving USA issues an annual report that studies trends in giving and reports on the current state of American generosity. They recently reported that 2017 giving by Americans jumped 5% to over $400 billion. This is the first time in American history that giving has exceed the $400 billion mark. To put that in perspective, Americans give more to charity than the entire Gross Domestic Product of nations like Israel, Finland, South Africa, and many others. Additionally, giving over the past ten years in the USA has been relatively flat. A 5% jump in giving year over year is remarkable.
At the same time, The American Enterprise Institute just issued a report projecting a $16.3 drop in charitable giving in 2018 due to recent changes to the federal tax law (the Tax Cuts and Jobs Act signed into law by President Trump in December) that will significantly reduce the number of Americans who itemize their deductions. Time will tell.
There are two bills currently working their way through Congress that would allow all taxpayers to take the charitable deduction with some limits, so if either of these bills gains traction, projections could change yet again.
For a little historical perspective, it’s helpful to examine what happened to charitable giving during past tax cuts. Following the Kennedy/Johnson tax cuts of 1964 and 1965, charitable giving rose 6%. Following the Reagan tax cuts in 1981 and 1986, giving rose 21%. Following the Bush tax cuts in 2001, giving rose 15% over the next next seven years (source: Chronicle of Philanthropy and the Washington Examiner).
We’ll have to wait to see where charitable giving is headed. My personal experience is that charitable giving has been the strongest I’ve ever seen over the past twenty-two years I’ve been involved with fundraising. Let’s hope it continues.