Americans overwhelmingly support legislation to allow everyone to receive a tax break for their charitable gifts, according to a poll released Tuesday by Independent Sector, a membership organization of nonprofits that is pushing the idea.
It is possible that Congress will vote to expand charitable deductions in a pending disaster funding package, but the biggest obstacle is the calendar. Congress has a limited time to consider legislation before going into recess for the entire month of October before the November midterm elections.
Nonprofits have long been angry that Congress passed legislation that took away some of the tax incentive to give among all but the wealthiest Americans. In 2017, Congress doubled the standard deduction taken by most taxpayers. Doing so meant that only high-income Americans who continued to itemize their taxes were able to take a deduction.
In response to the pandemic, lawmakers restored the deduction but capped it at $300 for individuals and $600 for couples. Legislation is pending in the House and the Senate that would restore the charitable deduction for people who don’t itemize and increase the cap to $4,000 for individuals and $8,000 for couples.
Eighty-five percent of Americans said they liked the idea of allowing people to take deductions for up to $300, according to the national polling firm TargetPoint. Support for raising the limit on charitable deductions to $4,000 for single filers was 77 percent of the 1,000 likely voters contacted for the poll. The margin of error was 3 percent.
The strong support for bringing back a tax incentive for charitable gifts is evidence that Americans are not polarized on every issue, said Ben Kershaw, Independent Sector’s director of public policy and government relations.
“Eighty-five percent of Americans agreeing on anything is pretty overwhelming,” he said. “There are some things that people really expect legislators to step up to.”
Kershaw hopes that the work nonprofits do in responding to disasters will help persuade lawmakers to tuck language into a $6.5 billion disaster-relief package that could receive a vote before the election. In August, Independent Sector and 33 other nonprofits, including the American Alliance of Museums, the Jewish Federations of North America, the National Council of Nonprofits, and United Way Worldwide sent a letter to congressional leaders urging lawmakers to include the charitable provision in the legislation.
The $300 charitable deduction provided nonprofits with at least $100 million but came at a hefty cost: It led to $1.5 billion in lost tax revenue, according to a 2021 study by the Urban-Brookings Tax Policy Center.
Kershaw said that a deduction that offered people the chance to write off more than $300 apiece could induce more people to give in larger amounts. But doing so would lead to bigger revenue losses for the federal Treasury.
But he said it didn’t make any sense to measure increases in charitable giving against any losses in federal revenue caused by the deduction. Instead, he said, it’s more important to look at the special role of nonprofits, which, he said, can respond to local needs much more quickly than federal programs.
“The comparison of tax dollars lost by the federal government and dollars invested in doing work in the community is not an apples-to-apples comparison,” he said. “It’s not a fair assessment of bang for the buck.”
The poll also showed strong public support for items in pending legislation introduced by Democratic Rep. Betty McCollum and Republican Rep, Fred Upton that Independent Sector supports.
Called the Nonprofit Sector Strength and Partnership Act, the pending legislation would establish a White House Office on Nonprofit Partnerships, and direct the Bureau of Labor Statistics to provide regular reports on the nonprofit work force on a quarterly basis as it does with other industries. The bill, which does not have any cosponsors, would also eliminate the 1023-EZ short form used to apply for nonprofit status. Some fear the form’s expedited approval process has led to lax enforcement of nonprofit fraud.
The poll found:
- 84 percent of Americans support nonprofits having a “seat at the table” in federal policy discussions.
- After being informed that 40 percent of ineligible applications for federal charity status are approved, “opening charities up to fraud,” 70 percent of those polled supported eliminating the 1023-EZ application for charitable status.
- 71 percent said they favored the regular publication of federal data on the nonprofit work force.
