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Charitable Giving Incentives Empower Working Families and Strengthen Nonprofits

Op-ed from the Council of Michigan Foundations, Michigan Nonprofit Association and Food Bank Council of Michigan.

CMF, Foodbank Council of Michigan, Michigan Nonprofit Association -NEW

Originally published by Crain's Detroit Business.

Charitable contributions from individuals and families of all income levels are essential to maintaining a healthy society and ensuring that nonprofit organizations can deliver on their missions. That's why we're encouraging the Michigan Legislature and members of Congress to act swiftly on several important bills - the Michigan Charitable Tax Credit at the state level and the Charitable Act at the federal level.

The Michigan Charitable Tax Credit (SB 127, SB 128, HB 4530, HB 4531) would incentivize families of all income levels to contribute to endowed funds across Michigan, strengthening our nonprofits that continue to face increased needs and high demand.

Nonprofits are tirelessly working on the ground to provide vital support to Michigan children and their families. They play a crucial role in ensuring access to essential resources such as food, shelter, health care, childcare, transportation, educational opportunities and more. Throughout the pandemic, our Michigan nonprofits served as front-line responders, addressing unique and unprecedented needs in our communities. Their efforts continue today in urban, rural and suburban communities across our state.

Nonprofits are powered by charitable giving, and, unfortunately, data shows that giving is sharply decreasing, especially among individuals.

Recent national data from Giving USA shows charitable giving decreased by more than 10% after inflation in 2022, marking the fourth time since 1956.

In addition, the number of households giving charitable donations – particularly those in lower and middle-income levels – continues to shrink. In 2012, individuals gave 74% of all charitable contributions, which dropped to 64% last year. These trends are concerning for the health of nonprofits.

We know charitable giving incentives can be powerful tools to spur giving. The Michigan Charitable Tax Credit unlocked opportunities for over 20 years by incentivizing families of all income levels to give charitable donations to endowed funds across the state, strengthening our nonprofits. Unfortunately, that credit was eliminated in 2012.

Immediately following the repeal of the tax credit, research by the Johnson Center for Philanthropy found that from 2011 through 2013, there was a 50% decline in $400 donations and a 27.5% decline in $200 charitable donations. Tax credits have a proven track record of encouraging charitable giving in our state. During the pandemic, when Congress enacted a temporary $300 deduction for cash gifts in response to the pandemic, the Fundraising Effectiveness Project found that 2020 donations under $250 increased by 15.3%.

Fortunately, bills have been introduced that recognize the importance of tax policy in providing relief to working families who contribute to important causes in their communities.

We are grateful to Senator Sam Singh, Senator John Damoose, Representative Jasper Martus, and Representative Will Snyder for their hard work, leadership and sponsoring legislation in Lansing that would help families across Michigan support the nonprofits doing the good work in their communities that they care so much about. These bills would allow Michigan taxpayers to claim an income tax credit for donations made to endowed funds at community foundations and donations to food banks and homeless shelters equal to half the value of their donation, up to $100 for individuals and $200 for joint filers. Resident estates and trusts could claim up to 10% of their tax liability, capped at $5,000. Last spring, the Senate passed the two Senate bills with overwhelmingly bipartisan support. Reinstating these credits incentivizes working families to invest directly in their communities.

In addition to the Michigan legislation, we are pleased that legislation (H.R. 3435/S.566) has been introduced in the U.S. House and Senate to restore and expand the charitable deduction for non-itemizing taxpayers. The Charitable Act would increase the cap of the universal charitable deduction to one-third of the standard deduction, roughly $4,600 for individuals and $9,200 for joint filers. It would make gifts to donor advised funds eligible for the universal charitable deduction. We are grateful for Senator Gary Peters’ leadership as an original co-sponsor of S.566 and we ask all members of Michigan's delegation to co-sponsor this legislation.

Data shows that these tax policies encourage charitable giving and increase resources for nonprofits to better support our Michigan communities. We encourage the Michigan Legislature and members of Congress to act swiftly to reinstate these valuable tools that put money back into the pockets of working families while they invest in their communities.

We encourage Michigan House and Senate leadership to work with Governor Gretchen Whitmer on a path forward for the state-level bills that will help families in every community across the state. We also ask that our federal delegation co-sponsor The Charitable Act, which helps create more tax fairness and puts money back into the pockets of working families while they invest in their communities.


Kyle Caldwell
President & CEO                                             
Council of Michigan Foundations             

Kelley Kuhn                                                      
President & CEO                                              
Michigan Nonprofit Association                         

Dr. Phil Knight
Executive Director
Food Bank Council of Michigan