A new study from the Fundraising Effectiveness Project, a collaboration led by the Association of Fundraising Professionals and the Urban Institute, suggests that the Tax Cuts and Jobs Act, the tax bill enacted in late 2017, may be starting to have an impact on overall charitable giving.

According to the Fundraising Effectiveness Project, while overall charitable giving increased by 1.6% in 2018, it did not keep pace with U.S. economic growth. Historically growth in U.S. charitable giving closely tracks GDP growth. According to the Giving USA 2018 report, charitable giving exceeded GPD growth between 2014 and 2017. In 2018, however, GDP growth outpaced charitable giving growth.

Additionally, FEP found that the total number of donors fell by 4.5% between 2017 and 2018 while the number of new donors to an organization decreased by 7.3% over the same time frame. The percentage of donors who donated to the same organization in 2017 and 2018 decreased by about two percentage points. For new donors (first giving was in 2017), the retention rate fell by four percentage points.

Two other important findings:

• Gifts from large donors: Giving by large donors saw 2.6% growth in 2018 as compared to 4.2% in 2017.
• Gifts from small & mid-level donors: Giving by donors who gave $250 or less dropped by 4.4% from 2017 to 2018 and by 4.0% from donors who gave $250 to $1000.

What does this mean? While the charitable deduction was preserved, the Tax Cuts and Jobs Act doubled the standard deduction, dramatically reducing the number of taxpayers who can deduct charitable gifts.

These early estimates from the FEP study suggest that the doubling of the standard deduction may be beginning to have an impact, particularly among small to mid-level donors.

CASE has been advocating for expanding the charitable deduction to all taxpayers through a universal charitable deduction. We will continue to urge lawmakers to incentivize all Americans to give to educational institutions.

To learn more about the universal charitable deduction and advocacy efforts to enact it, visit the public policy resources and be sure to join the CASE Advocacy Network.