Leaders at The Pittsburgh Foundation, The United Way of Southwestern Pennsylvania and The Greater Pittsburgh Nonprofit Partnership released a joint statement about how the federal tax-cut bill could lead to significant reductions in charitable giving.
Specifically, an analysis of 2015 tax data (the most recent available) for Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland Counties found that:
• There are 394,000 eligible tax filers in our region. Of these, 250,000 filers claimed a charitable tax deduction in 2015.
• These 250,000 filers, incentivized by charitable tax deductions, gave $1.2 million to charity that year.
• The projected loss to charity under the proposed bill would be $60.3 million.
Official Joint Statement
As Republicans assigned to a House and Senate conference committee race the clock to join competing bills and pass the largest tax-cut legislation in more than 30 years, we join with other philanthropic and nonprofit leaders across Pennsylvania and across the country to oppose several provisions of this legislation for the harm they are certain to do to southwestern Pennsylvania’s record of generous giving.
To accommodate generous tax cuts for narrow segments of our population, crafters of the plan have placed the charitable sector directly in harms’ way. Our region’s most charitable and most vulnerable residents stand to lose. That does not bode well for the future well-being of our communities. Fewer people will be donating to nonprofit missions and greater numbers of people will need to be served by those missions.
Heading for final approval is the provision to double the standard deduction and repeal or scale back most itemized deductions, which would sharply reduce the number of southwestern Pennsylvania taxpayers who itemize.
Nationally, the change is expected to reduce charitable giving by between $12 billion and $20 billion next year, based on estimates from the Tax Policy Center.
In Pennsylvania, 1.5 million taxpayers claimed the charitable deduction and donated nearly $7 billion to nonprofit organizations. A loss of just 5 percent would mean $350 million less to fund essential human services in the state, including food banks, homeless shelters, job training programs, mental health services, addiction treatment and certified child care. In southwestern Pennsylvania, 2015 tax year data, the latest data available, shows that the amount given to charity by 250,000 filers totaled $1.2 billion, and the projected loss to charity under the proposed bill would be $60.3 million.
We represent the region that was the founding ground for organized philanthropy more than a century ago, and we believe it is the American way to encourage individual giving. It should be central to the country’s tax policy to make it easier, not harder, to support vital human services and other missions in the nonprofit sector.
We called on Pennsylvania’s Republican Sen. Pat Toomey, who is a member of the legislative conference committee, along with the region’s other members of Congress to reduce the financial harm to nonprofits and those served by them by including a universal charitable deduction, which could be claimed on top of the standard deduction by those who don’t itemize their taxes. The universal charitable deduction provides added incentives for those who don’t itemize to continue their giving. Although they were proposed by fiscally conservative congressmen, neither the House nor the Senate versions of the tax-cut bill contains a universal charitable deduction provision. We are awaiting a response from Senator Toomey.
Our region’s Congressional representatives embracing this bill argue that the larger standard deduction will account for the giving people do during the year - that it will simply make tax filing easier. But our organizations have been working with donors and financial advisers for years, and, while we are certain that southwestern Pennsylvania residents and businesses are primarily motivated by generous hearts, incentives do matter.
Tens of thousands of families in our region make an extra effort at the end of the year to give back, and they are budgeting their giving according to the break they will get through a tax deduction. If tax incentives matter for corporations, a position that has the highest priority in the tax cut bill, then they matter for families too. We know that southwestern Pennsylvanians won’t stop giving -but we also know that without the tax incentives, they will likely give much less.
Even in their most generous moments, community foundation donors, United Way campaign contributors and The Greater Pittsburgh Nonprofit Partnership advocacy will not be able to make up for the public dollars that are directed away from worthy causes due to this misguided tax bill. And that is especially the case with respect to health care.
Other egregious pieces that are headed for inclusion in the compromise bill involve removing the individual mandate under the Affordable Care Act, a provision that experts say will lead to millions of healthy people opting out of insurance, which will then result in sharp premium increases for those in the system. The result, according to CBO estimates, is a drop of four million Americans from insurance coverage in the next two years.
Beyond dollars lost to health care changes and deductibility, there is a provision in play that would thrust the nonprofit sector into the political arena by scuttling the Johnson Amendment. That piece of federal legislation has for more than 60 years ensured that tax-exempt organizations, including charitable nonprofits, religious denominations and foundations, do not endorse or oppose political candidates.
We believe tearing down that fire wall would be extraordinarily destructive, as would allowing tax-exempt charitable contributions to flow from these organizations into political campaigns.
Our three organizations stand against any attempt to fund a tax cut bill on the backs of those most in need and to push away the charitably inclined who are willing to help. It won’t be good for any of us to have southwestern Pennsylvanians hampered in their ability to give as the ranks of those receiving those charitable dollars increase and their situations worsen. At this moment in history, when government is contracting financial support of people in need, local charitable organizations need more support not less. This federal law should incentivize not hinder local philanthropy. If you agree, let your senator or congressional representative know.
