The Community Foundation of Jackson County joins the Indiana Philanthropy Alliance, representing 145 public and private foundations across Indiana, to express concern about the impact recent tax proposals could have on charitable giving.
Although these proposals do not eliminate the charitable deduction, they could effectively eliminate tax incentives for millions of individuals and couples. That, in turn, could dramatically decrease charitable giving in Indiana and across the country, affecting the impact of local agencies such as Anchor House, Big Brothers Big Sisters, Community Provisions and the Jackson County United Way, as well as the Foundation and many others serving the young and old alike all across our community.
And while Jackson County residents, like Americans in general, are generous, research consistently shows that people do give more when given the incentive to do so through the tax code. A recent study, just released by Independent Sector and conducted by the Indiana University Lilly Family School of Philanthropy, found that the proposed tax reforms could cut charitable giving by $13.1 billion.
How might Indiana be affected by such a decrease? There are nearly 33,000 nonprofit organizations in Indiana, employing more than 230,000 people. Each year, Hoosiers give $2.97 billion and Indiana foundations grant $1.48 billion to charitable organizations to fund increased access to education and health care; help Hoosier families escape the cycle of poverty; help military veterans and seniors; mentor children; and protect the environment. A reduction in charitable giving could significantly reduce these services and the quality of life for all Indiana residents.
We support the IPA advocacy for policy that encourages and promotes charitable giving. However, if the current standard deduction does increase significantly, we want to ensure that charitable giving doesn’t decline as a result of this reform. A “universal” charitable tax deduction would ensure that every American has an incentive to engage in charitable giving through a federal tax code that extends the charitable deduction to all taxpayers, regardless of their itemizer status.
The IU study shows that when tax reform proposals incorporated a standard deduction for all taxpayers, including people who do not currently itemize on their taxes, charitable giving would increase by an estimated $4.8 billion. It also shows that current tax reform proposals would reduce charitable giving to religious organizations by as much as 4.7 percent and giving to other types of charitable organizations by as much as 4.4 percent.
We contend that our tax code should promote and encourage philanthropy. The charitable community has a long and unique history of being the sector where people come together to solve problems, such as funding long-term flood recovery in Jackson County in 2008, and improve our communities, such as constructing the Jackson County Learning Center.
Our tax code should reflect these values by encouraging all people to give more to the organizations and causes that care for those in need and improve our quality of life.
We encourage you to reach out to your federal lawmakers and urge that they protect and promote charitable giving incentives through the federal tax code. U.S. Sen. Joe Donnelly may be reached by email at donnelly.senate.gov/contact/email-joe or by phone at 202-224-4814. U.S. Sen. Todd Young may be reached by email at young.senate.gov/contact/email-todd or by phone at 202-224-5623.
Your actions can make a difference.
President and CEO Dan Davis of the Community Foundation of Jackson County writes a monthly column. The foundation is at 107 Community Drive, Seymour, IN 47274. For information about donating, call 812-523-4483 or send an email to email@example.com.