AFP Urges Senate Finance Committee to Enact Universal Charitable Deduction, Enhance IRA Charitable Rollover

(Arlington, VA) The Association of Fundraising Professionals (AFP), the largest community of charitable fundraisers in the world, submitted a statement to the Senate Finance Committee today calling on Congress to approve new tax incentives to encourage giving in the wake of new challenges that charities are facing. 

“Just as the pandemic is winding down and fundraisers were feeling more optimistic, charities and their donors are now faced with skyrocketing gas prices, rising inflation costs, geopolitical conflict and weak consumer confidence,” said AFP President and CEO Mike Geiger, MBA, CPA, in the comments to the Finance Committee. “This daunting set of challenges, coupled with the household decline in charitable giving participation, could severely hinder the ability of the sector to meet the needs of communities across America. But Congress can help charities overcome these challenges and at the same time encourage more Americans to participate in philanthropy.”

One of AFP’s recommendations to Congress is to reinstate the universal charitable deduction, allowing all taxpayers to take a tax deduction for their charitable giving even if they didn’t itemize their taxes. While the provision expired at the end of 2021, new data from the AFP Foundation for Philanthropy’s Fundraising Effectiveness Project (FEP), conducted with GivingTuesday, found that the deduction had a significant impact on giving.

In 2020 and 2021, individuals could take up to a $300 tax deduction for their contributions, while married joint filers could take up to a $600 deduction. Gifts of exactly $300 and $600 increased significantly in those years compared to 2019. 

In addition, many charitable gifts are made on December 31, the last day of the year, because of tax incentives. On that day in 2020, gifts of exactly $300 increased by 33% and gifts of $600 increased by 12%, compared to the same day in 2019. 

“While there are many factors that contribute to increased donations, one key factor was clearly the availability of the charitable deduction to non-itemizers,” added Geiger. “The universal charitable deduction works.”

AFP also urged Congress to enhance the Charitable IRA Rollover by passing the Legacy IRA Act. The current rollover provision allows individuals age 70½ to make direct tax-free gifts of up to $100,000 annually to charities from their IRA. The Legacy IRA Act would expanding the rollover provision to allow taxpayers age 65 and over to direct up to $400,000 annually in IRA distributions to charities, charitable gift annuities and charitable remainder trusts.

“Giving through the IRA Charitable Rollover has skyrocketed over the past few years,” said Geiger, pointing to recent survey data from FreeWill’s online giving platform which found a 390% increase in total IRA Charitable Rollover gifts from 2019 to 2021. “That increase is even more impressive given that required minimum distributions from IRAs were eliminated for 2020 as part of Congress’ pandemic relief measures. It’s another incentive that is helping charities and encouraging more participation in the great American tradition of philanthropy, and Congress needs to pass the Legacy IRA Act now.”

A copy of AFP’s statement to the Finance Committee can be found here.