Statement on Tax Reform and the Charitable Deduction
This year marks the 100th anniversary of the charitable contribution deduction, which empowers individuals to give of their personal income for the benefit of the public. The legislation was enacted by Congress in 1917 and has been profoundly successful in promoting charitable giving by Americans. In 2015, individuals were responsible for $265 billion of the $373 billion total private giving (72 percent). Recent debate about federal tax reform, however, puts these benefits at risk with the consideration of policies ranging from reducing the number of taxpayer itemizers with access to the charitable deduction and capping the amount of allowable charitable tax deductions, to creating a hierarchy among charities or even narrowing the definition of charities in a way that would exclude certain kinds of nonprofit organizations.
Americans for the Arts will oppose policies that remove incentives for charitable giving or limit the full scope and value of the tax deduction—for all forms of charitable gifts (arts, religion, education, environment, etc.). We will work to ensure that any change made in tax reform does no less than encourage even more giving by more Americans. With that in mind, Americans for the Arts has joined the Giving100 campaign that seeks to provide a universal charitable tax deduction for 100 percent of American taxpayers (both itemizers and non-itemizers) in recognition of the 100th anniversary of the charitable tax deduction making a significant impact on our communities, schools, and lives.
Implication for the Arts
Total private sector giving to arts and culture charities was $18.21 billion in 2016, with the majority coming from individuals. Charitable giving to nonprofit arts organizations represents 30 to 60 percent of the typical nonprofit arts organization’s budget. These contributions offer a tax benefit for the donor, provide millions of children with arts education experiences, and make the arts accessible and affordable to an entire community—not just to those who can afford top-tier ticket prices. The nonprofit arts have always been eligible for the charitable deduction in keeping with the nation’s 100-year old tradition of incentivizing taxpayers to give to causes that they believe will benefit the public good. Any limitations on charitable deductions of arts contributions would reduce the amount of contributions to the arts and limit the opportunity of every American to engage in the arts.
Charitable Contributions are Vital to the Nonprofit Arts Industry
The extensive data about the amount of charitable giving and the public’s ongoing support for this policy demonstrates the importance of maintaining the charitable tax deduction.
- Giving to the arts by individuals, foundations, and corporations grew 6.4 percent to $18.21 billion in 2016—representing 4.88 percent of all charitable giving and the fifth consecutive year of growth.
- Charitable giving enjoys wide public support. A 2016 study by the Independent Sector found that 88 percent of voters believe we should make it easier for people to deduct charitable contributions from their taxes.
- Additionally, a public opinion poll commissioned by the United Way found that 4-in-5 Americans (79 percent) believe reducing or eliminating the charitable tax deduction would have a negative impact on both charities and the people they serve.
- In 2015, 27 percent of the population donated to an arts, culture, or public broadcasting station. 33 percent of Millennials donated, a higher rate than Gen Xers (27 percent), Baby Boomers (23 percent), and Elders (24 percent).
- The current GOP tax reform plan would result in 28 million people losing their tax incentive to give to charities. Additionally, the doubling of the standard deduction provision could result in $13.1 billion less in charitable giving each year according to Indiana University Lilly Family School of Philanthropy. This would damage the very fabric of the charitable sector and our communities.
You Can Make a Difference
- Make your voice heard. We are staying in contact with Congress and the White House, delivering the economic impact message, and encouraging others to as well. You should, too. Take two minutes to send a special E-alert to your member of Congress on this issue.
- Join us! Join the Arts Action Fund to take political action. It’s free. Encourage others to join. We will send you alerts so you can respond to decision-makers fast.
- You are not alone! Americans for the Arts is a member and represented on the board of directors of the Independent Sector, a coalition of associations and organizations working to preserve the full charitable deduction for the nation’s 1.5 million nonprofit organizations. Americans for the Arts is also a member of the Charitable Giving Coalition, which has long fought for the protection of the full value and scope of the charitable tax deduction.