NICK SCHIFRIN: Giving to the 100 biggest charities in the U.S. rose by 11 percent in the past
year, thanks to big checks from the wealthy.
But the overall share of people who give to charity continued a long-term slide. Small
nonprofits have been hit the hardest.
Lisa Desjardins reports that analysts blame a number of factors, including the 2017 tax
law.
LISA DESJARDINS: We're seeing those uneven giving trends even in a robust economy, and
that's leading many nonprofit leaders to worry as we head into 2020.
Stacy Palmer, editor of "The Chronicle of Philanthropy," is here to explain more.
And let's start with this tax change itself. Essentially, fewer people are claiming tax
deductions because of their charitable donations?
STACY PALMER, "The Chronicle of Philanthropy": Right.
One of the things that Congress did when they changed the law is, they said, let's make
it simpler to fill out your tax form. So they doubled the standard deduction. That means
that very few people itemize anymore. Only about 8 percent of Americans itemize, and
that means those people all have access to the charitable deduction.
But everybody else doesn't, because they're not taking a write-off for anything. And so
something that was intended to simplify the tax system ended up having this inadvertent
affect on charities and giving. So many people just don't have access to that charitable
deduction anymore.
LISA DESJARDINS: Essentially, the deduction used to be $12,000 for a couple, for two people,
and now it's $2,400.
STACY PALMER: The standard -- the standard deduction.
So that amount you can write off when you're doing your taxes and you're figuring out how
many deductions do I have, between the mortgage deduction and the charitable, if you're a
couple, if you have $24,000 in deductions or more, then you want to take the write-offs.
But if you don't...
LISA DESJARDINS: But that's not most people.
STACY PALMER: Most people don't.
LISA DESJARDINS: Do not have $24,000 in deductions, right.
STACY PALMER: Exactly. So...
LISA DESJARDINS: OK.
So then the question is, now there are fewer people who can deduct, who get a tax benefit
from giving to charity, how is that affecting charities? Are they see a big change in their
donations?
STACY PALMER: Charities think they are, especially small, mid-size groups. They say they're feeling
the pain more than big organizations.
And part of this is because people who are fairly wealthy, they can still itemize and
get that tax deduction. But most middle-class to middle-class, affluent people, those are
the people who lost that deduction. And they're the ones who don't have any incentive to give
because of taxes.
Now, there are lots of other reasons people give or choose to give, but there's estimates
that as much as $20 billion might have been lost to charities in a year because of this
tax change.
Now, we should remember too Americans give more than $425 billion. So $20 billion is
important, but they're still giving. People are still giving very generously. So it's
not that the entire charity sector has been hit by this tax change.
LISA DESJARDINS: Let's talk about the wealthy. What does their giving look like? We know
that their incomes are going up at the top. Are there -- is their level of generosity
also going up?
STACY PALMER: A lot of the people who look at charitable giving think that it's not going
up as much as it should compared to their wealth.
So, certainly, we see very generous contributions. And that's one reason that giving hasn't gone
down. But compared to the amount of wealth people have, they just can't give it away
fast enough.
Even people like Mayor Bloomberg, who gives lots of money to charity, he's promised to
give it all away in his lifetime. And he still has billions and billions more left to give,
because he just gets wealthier.
LISA DESJARDINS: But I want to understand what you're saying.
Is it a problem of them not having enough outlets, or is it that those at the top are
gaining more income than they are giving away? Is it their decision? They're not being as
charitable as they are profitable, I suppose?
STACY PALMER: It's probably a little bit of both.
In some cases, if they can't find enough places where they want to give where they think they
can make a difference, that might cause a big donor to hold back. But they're also not
saying, oh, I just made $20 billion in the stock market, and I need to give it all away.
So we're not seeing people give proportionately to their increases in wealth. And that's the
part that is startling. We haven't seen, in this great economy, an increase in the percentage
of income that people are giving to charity.
LISA DESJARDINS: Another issue for some of these especially larger charities, we have
seen some scandals involving some of the largest donors, for example, the Sackler family, their
connection to the opioid crisis, Jeffrey Epstein, his charges and eventual death related to
sex trafficking charges.
How has that affected the giving community, and especially these big institutions that
seem to depend on the wealthy? How -- what is that relationship like? Is there too much
dependence on big donors? And how has that changed?
STACY PALMER: Big nonprofits are really looking at their relationships with big donors, especially
in these cases like Sackler and Epstein, where they have to think, what are our values? Is
it appropriate for us to take money from those kinds of people?
Because some alumni, for example, of institutions that took money from Sackler or Epstein, they
might not want to give anymore because they're disappointed in their institution. So, it
has a ripple effect, not just that they took money from that one donor, but whether other
donors are going to be disappointed.
So, many of them are indeed looking at, what policy should we have? How should we articulate
who we're going to accept money from? And should we make it clearer that really we depend
on lots of small gifts and middle-size gifts from people? Is it good to be run by all of
these billionaires?
Those are big questions that people are asking. So, you see this in the political debates
about wealth taxes and other things. It's the same kind of consideration that's going
on in the nonprofit world, too.
LISA DESJARDINS: What about the small nonprofits? That's the vast majority of them, are just
a few people with a community concern. They don't have those big, wealthy donors. How
are they doing right now?
STACY PALMER: Smaller charities are struggling to be able to persuade people to give. There's
a lot of competing causes.
And middle-class donors are giving less. We have seen a staggering drop in the number
of middle-class Americans who are giving. Perhaps, in this decade, we saw as many as
20 million fewer people are giving to charity.
So, as people are giving less, it's harder and harder for some of those small nonprofits
to attract as many people as they need to give.
LISA DESJARDINS: Stacy Palmer with "The Chronicle of Philanthropy," thank you.
STACY PALMER: Thank you.