Charitable giving dropped last year in the wake of the new tax law

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Americans gave less to charity in 2018 than a year earlier, following changes in the tax law and fourth-quarter declines in the stock market, according to a new report.

Charitable giving by individuals America fell 1.1% to $292 billion in 2018 compared with 2017, according to Giving USA. Because giving by foundations and companies increased, total giving in the U.S. increased slightly, by 0.1%, to $428 billion.

The decline in giving by individuals comes after the new Republican-backed tax law, which took effect in 2018, reduced the tax incentives of giving for many households. The law signed by President Donald Trump doubled the standard deduction for families to $24,000, meaning far fewer households itemized and took a deduction for charity.

The volatile stock market last year and declines in December may have also reduced giving, since giving is closely tied to the economy and stock market, according to Giving USA. Last December, the S&P 500 fell 9.18%, its worst monthly performance since February 2009, when it dropped 10.99%. The decline that month contributed to the fourth quarter being the worst quarter for the S&P since the third quarter 2011.

“It was a complex year for charitable giving,” said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy at Indiana University-Purdue University Indianapolis, which produced the report with The Giving Institute. “The economy was strong but we had these other factors of the new tax law and the stock market.”

The new tax law may have been the largest driver of the decline. More than 45 million households itemized their tax deductions in 2016, but that number was expected to fall to between 16 million and 20 million in 2018, according to the report. That suggests that millions of households no longer had a tax incentive to give.

Osili said that giving is also becoming highly bifurcated, like the economy as a whole. The very wealthy, who account for a growing share of income and wealth, are giving more, while the broader population may be giving less. The result is that nonprofits and charitable causes are becoming increasingly dependent on a small number of wealthy super-donors rather than broader-based supporters.

“What we see in the data is that the number of total donors is declining,” she said. “But among those who are giving, the amounts are increasing. So donors are down but dollars are up. It’s a greater concentration.”

Giving by individuals represents by far the largest share of giving in America. Giving by foundations increased 7.3% to $76 billion. Giving by corporations increased 5% to $20 billion, while giving by bequests was flat at $40 billion.

When it comes to the charitable causes Americans supported, religion still tops the list at $125 billion, although religious giving declined in 2018 by 1.5%. The second most popular cause, education, also saw a decline, falling 1.3% to $59 billion. The only two categories that saw increases were giving to international affairs, which saw a 10% increase to $23 billion, and giving to the environment and animal organizations, which saw a 4% increase to $13 billion.

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