Open Letter to Congressional Delegation on Tax Reform

By Marissa Manlove, CAE, President/CEO, Indiana Philanthropy Alliance

The Indiana Philanthropy Alliance (IPA), representing 145 public and private foundations across Indiana, would like to express our concern about the impact recent tax proposals would have on charitable giving. While these proposals do not eliminate the charitable deduction, they do effectively eliminate tax incentives for millions of individuals and couples, which in turn would dramatically decrease charitable giving in Indiana and across the country.

And while Americans are generous, research has consistently shown that people do give more when they are incentivized 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 proposed tax reforms could decrease charitable giving by $13.1 billion.

How would Indiana be affected by such a decrease?  There are nearly 33,000 nonprofit organizations in Indiana, employing over 230,000 people.  Each year, Hoosiers give $2.97 billion and Indiana foundations give $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.

IPA is advocating 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 via a federal tax code that extends the charitable deduction to ALL taxpayers, regardless of their itemizer status.

In fact, the aforementioned 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 actually increase by an estimated $4.8 billion. It also showed 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.  For a copy of the Lilly Family School of Philanthropy research, go here.

IPA believes that our tax code should incentivize philanthropy. The charitable community has a long and unique history of being the sector where people come together to solve problems and improve our communities. 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.

Should you have additional questions or need more info, please feel free to contact me. And thank you for all you do on behalf of all Indiana citizens.

Sincerely,

Marissa S.  Manlove
President/CEO
Indiana Philanthropy Alliance