This week, on June 9, the Joint Economic Committee (JEC) held a hearing on Capitol Hill on the importance of charitable giving during the coronavirus crisis. Propelling American generosity to churches and charities serving the vulnerable in this crisis is a priority of the ERLC’s advocacy in Washington, D.C.
What is the Joint Economic Committee?
The JEC is one of four standing joint committees of the U.S. Congress. It’s joint, meaning the committee has members from both the Senate and House of Representatives, and standing, meaning it is permanent. The JEC was created alongside the President's Council of Economic Advisers in the executive branch in the Employment Act of 1946. The purpose of these dual advisory panels is to review economic conditions and recommend improvements in economic policy.
Why did the JEC host this hearing?
The goal of the Tuesday hearing was to work toward a legislative plan to further encourage private philanthropy and increase overall household participation in charitable giving. The hearing was led by Chairman Mike Lee (R–Utah) and Vice Chairman Don Beyer (D–Va.) with Sens. Amy Klobuchar (D–Minn.), James Lankford (R–Okla.), and Jeanne Shaheen (D–Minn.) participating. The hearing was an important contribution to this debate which has gained interest because of the strain nonprofits are under from the pandemic.
What is the state of charitable giving?
One concern raised on the state of charitable giving was that not only are nonprofits losing funding now, but also that there is a concerning trend of a decline in individuals making donations over the past two decades. Sen. Lee and Rep. Beyer shared that from 2000 to 2016 the percentage of American households that give to charity decreased from 66% to 53%.
Practically, in order to boost donations during the pandemic as well as increase participation in personal giving in the years following, legislators and the hearing’s witnesses voiced their support of various tax incentives for charitable giving.
What were some of the proposals?
Most in attendance spoke favorably of the CARES Act’s universal deduction for charitable donations and some said even more can be done, because the deduction was capped at $300. In addition to the incentives for charitable giving provided under the CARES Act, Rep. Beyer proposed increasing the minimum distribution rule for private foundations from 5% to 10%. He also criticized the Tax Cuts and Jobs Act’s role in the decreased number of donors over the past couple of years. By doubling the standard deduction, the act saw a fall in the number of itemizers, producing a fall in the number of individuals able to give.
One of the witnesses was Dr. Una Osili, a professor of Economics at Indiana University Purdue University Indianapolis (IUPUI). Osili cited a study from the school which showed that by extending non-itemized deduction, charitable dollars given could increase by up to $26 billion and the number of donor households could increase by 8% by the end of 2021. In response to this study and other recommendations to expand charitable deductions where possible, some expressed concern at the possibility of the government losing crucial revenue. To this Osili responded that there is significant evidence that as a result of tax incentives, charitable giving increases much more than tax revenue decreases, relatively speaking.
Why does the ERLC support a Universal Charitable Deduction?
The UCD policy incentivizes individuals in all income brackets to give philanthropically, thus increasing the number of donors across the country to the organizations people trust to serve their communities. Simply put, this policy gets the government out of the way of American generosity.
In March as the COVID-19 crisis shook America, the ERLC called on Congress to pass legislation implementing a two-year, no cap Universal Charitable Deduction (UCD). In his letter to congressional leadership, ERLC President Russell Moore noted that support for a UCD as a means of stimulating charitable giving is critical during this health and economic crisis, when churches and charities need support the most as they serve those in the most need.
Those who value the ministries of churches and the work of charities can be encouraged by this week’s hearing that many in Congress are moving in the direction of supporting a UCD. Takeaways from the hearing indicate that there is recognition of the need to provide more tax incentives for charitable giving, awareness of the need to incentivize Americans in lower and middle income brackets to donate, and growing enthusiasm from both parties to work together on the issue. There is more work to be done, but the hearing points to steps in the right direction.
ERLC intern Isaac Whitney contributed to this article.