The Giving USA 2018 Report is Out, but the Tax Cuts and Jobs Act Could Reshape 2019’s Results
by the Lilly Family School of Philanthropy at Indiana University
Giving USA is the longest-running, most comprehensive annual report on charitable giving in the United States. The report was first created in 1956 by the American Association of Fundraising Council (today’s Giving Institute), which endeavors to advance philanthropy through research and education. Giving USA is now published by the Giving USA Foundation, established by the Giving Institute in 1985, and has been researched and written by the Indiana University Lilly Family School of Philanthropy since 2001.
Giving USA 2018 reports that, driven by the previous year’s booming economy, a record $410.02 billion was given to charity in 2017, noting strong growth across all four sources of giving (individuals, bequests, foundations, and corporations) and eight out of nine charitable subsectors (religion; education; human services; foundations; health; public-society benefit; arts, culture, and humanities; and environment/animals). Despite the favorable philanthropic landscape in 2017, many fundraisers, donors, and scholars can’t help but look ahead to 2018 due to passage of the Tax Cuts and Jobs Act at the end of last year.
Although the effects of the legislation on charitable giving cannot be determined with certainty at this time, the Tax Cuts and Jobs Act contained three primary provisions that may affect charitable giving by individuals/households (which comprises 70 percent of total giving):
- Increased the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for couples;
- Decreased the top marginal tax rate for individuals and couples from 39.6 percent to 37 percent; and
- Capped the state and local income, sales, and property tax deduction at $10,000.1
2017 Contributions: $410.02 billion by source
(in billions of dollars — all figures are rounded)
With these changes in tax policy, the Indiana University Lilly Family School of Philanthropy anticipates adjustments in the information gathered by the IRS and the corresponding data upon which Giving USA builds its estimates for individual giving. Although the 1980s saw significant changes in federal tax policy, 2017’s Tax Cuts and Jobs Act is the most dramatic change to individual tax laws in recent years, and will require a careful and well-researched approach for estimating charitable giving in future editions of Giving USA.
The Indiana University Lilly Family School of Philanthropy has already begun analyzing the potential effects of tax policy changes on both giving and available data sources. In May 2017, the school released a white paper in partnership with Independent Sector that examined the possible impact of proposed tax policy changes.2 This analysis, as well as subsequent analyses that consider the specific provisions contained in the Tax Cuts and Jobs Act, will help guide any shifts in Giving USA’s future data collection and analysis methodology.
The Indiana University Lilly Family School of Philanthropy is also involved in ongoing data collection and analysis of giving by U.S. households included in the Philanthropy Panel Study (PPS), conducted every two years in partnership with the University of Michigan Institute for Social Research’s Panel Study of Income Dynamics (PSID). This data source will be critical in estimating giving by the growing number of individuals who are expected to become non-itemizers in 2018 and beyond.
Giving USA has encountered other policy changes that have impacted the way in which it builds its annual charitable giving estimates. The team at the Indiana University Lilly Family School of Philanthropy and Giving USA Foundation is committed to continuing to build partnerships with researchers and practitioners that improve Giving USA’s ability to produce the most reliable picture of Americans’ generosity year after year.
The Indiana University Lilly Family School of Philanthropy increases the understanding of philanthropy and improves its practice worldwide through critical inquiry, interdisciplinary research, teaching, training, and civic engagement. Read the Giving USA 2018 press release here, or click here to learn more about the Lilly School’s other areas of research.
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- “H.R.1, An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” Congress.gov, retrieved March 2018, https://www.congress.gov/bill/115th-congress/house-bill/1
- The white paper is available at https://www.independentsector.org/wp-content/uploads/2017/05/tax-policy-charitable-giving-finalmay2017-1.pdf