Impact of Universal Charitable Deduction on Charitable Giving Trends
Explore the impact of the Universal Charitable Deduction on charitable giving trends, featuring insights on fundraising ethics, membership statistics, and the effects of donation incentives on philanthropy. Learn how the expiration of the deduction in 2021 led to historic lows in charitable contributions and donor numbers, and see the continued decline in giving into 2023.
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AFP Lobby Week afpglobal.org
About AFP 25,000+ members in 180+ chapters across the U.S. and around the world. Members raise funds for every conceivable charitable cause. Collectively raise over $115 billion every year for their organizations. Abide by the only enforced code of ethics in the fundraising profession. afpglobal.org
AFP Code of Ethics www.afpglobal.org/ethics Members must sign the AFP Code of Ethics every year. The code ensures that fundraising is practiced with honesty, integrity, transparency, accountability and adherence to safeguarding the public trust. The code is upheld by a strict enforcement process directed by the AFP Ethics Committee. afpglobal.org
The Charitable Act (S. 566/H.R. 3435) Universal charitable deduction expired at the end of 2021 Increase the cap on the previous deduction from $300/$600 to one-third of the standard deduction ($4,600/$9,200) Extend the availability of the deduction through 2024. Allow gifts to donor-advised funds. Estimated to increase giving by $17 billion a year. afpglobal.org
Positive Impact of Temporary Universal Charitable Deduction During COVID Overall annual gifts: 7.5% INCREASE in gifts of exactly $300 in 2020 overall compared to 2019 (the latest year without the universal charitable deduction). 7.5% INCREASE in $300 gifts in 2021 compared to 2019. On December 31, the last day of the year when many charitable contributions are given so donors can take advantage of tax incentives: 33% INCREASE in gifts of exactly $300 in 2020 compared to 2019. 7% INCREASE in $300 gifts in 2021 compared to 2019. afpglobal.org
2022: Historic Lows After UCD expired, FEP data found: 1) total dollars given to charities declined and 2) overall number of donors sharply declined by 10 percent. According to Giving USA, 2022 was one of the worst years in philanthropy history. Giving dropped 10.5 percent after inflation, only the fourth time that donations have fallen since 1956. Giving by individuals, who typically provide the bulk of all donations, fell by 13.4 percent after inflation. Even as U.S. GDP grew by 2.1 percent, charitable giving as a share of GDP shrunk and charitable giving as a share of personal disposable income dropped to 1.7 percent a near 30-year low. afpglobal.org
2023: Continued Decline in Giving From 2022 to 2023, there was a 2.8% drop in dollars, 3.4% drop in donors, and 2.5% decrease in donor retention. The Fundraising Effectiveness Project report noted that donors contributing less than $500 were responsible for 79.3% of the overall decrease in donors. Giving USA confirms this decline in giving by individuals specifically. Individual giving saw the lowest growth out of individuals, foundations, bequests, and corporations a decline of 2.4% when adjusted for inflation. afpglobal.org
Charitable Act (S. 566/H.R. 34345) Bipartisan, Widely Supported Solution As of July 1, the Senate bill has 24 cosponsors (12 Democrats and 12 Republicans) nearly one-quarter of the Senate. Lead Senate sponsors are Senators Lankford (R-OK) and Coons (D-DE). The House has 58 bipartisan cosponsors. Lead House sponsors include Ways and Means Members, Reps. Blake Moore (R-UT), Danny Davis (D-IL), Michelle Steele (R-CA), and Chris Pappas (D-NH). Bill has been supported by AFP Global and more than 1,000 charities from all 50 states: https://charitablegivingcoalition.org/wp-content/uploads/2024/02/CGC-Letter-2.27.24.pdf afpglobal.org
