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Legislation Under Consideration Aimed to Increase Donor Base and Charitable Giving

A proven effective tool to incentivize giving is once again being considered by the Michigan Legislature. If reinstated, the Michigan Charitable Tax Credit would provide pathways to giving for families of all income levels in the state. Plus, many CMF members were on Capitol Hill as new federal legislation was unveiled to support charitable giving.

Charitable Act press conference in D.C. during FOTH.

The Michigan State Legislature introduced the Michigan Charitable Tax Credit last week. If reinstated, it would incentivize families to engage in charitable giving.

As CMF reported, the Michigan Charitable Tax Credit, which was eliminated as part of tax reform in 2012, unlocked opportunities by incentivizing families of all income levels to give charitable donations to endowed funds across the state, strengthening our nonprofits. 

The tax credit allowed Michiganders to deduct 50% of their donation or gift in the $200 to $400 range to a Michigan community foundation, homeless shelter, food bank or public institution on their tax statements.

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.

The Senate Bill 0127 is expected to advance to committee review as early as next week.

“We are grateful for the bipartisan leadership in introducing a two-bill package that includes the Michigan Charitable Tax Credit,” Kyle Caldwell, president and CEO of Council of Michigan Foundations, said. “The tax credit has a proven track record of encouraging charitable giving in our state and could help address the decline in the number of households giving, especially among those who earn lower wages. Reinstating it 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.”

In Lansing, the Capitol Region Community Foundation hosts close to 200 endowment funds for nonprofits in the community and the loss of the tax credit had an adverse effect on the growth of these funds.

“On behalf of hundreds of nonprofits in our community that are providing critical support for families, we are grateful this tax credit is being considered by the Legislature. We saw firsthand how the credit originally incentivized giving and made a profound difference. Its reinstatement would be especially beneficial today, as our community foundation works to build equity for small nonprofits who serve disadvantaged communities of color,” Laurie Strauss Baumer, president & CEO of the Capital Region Community Foundation.

CMF’s Government Relations and Public Policy Team will be meeting with our state policymakers this week as part of the Michigan Nonprofit Association’s (MNA) annual Nonprofit Day at the Capital about the charitable tax credit and other timely issues.

Baumer will also join a panel discussion on the Michigan Charitable Tax Credit during MNA’s Nonprofit Day.

At the federal level, a new bill was introduced to incentivize charitable giving.

During Foundations on the Hill (FOTH) 2023 last week, CMF members attended a press conference outside of the Capitol building hosted by the Charitable Giving Coalition announcing the Charitable Act.

The new legislation, introduced by Senators James Lankford and Chris Coons, would allow individuals who do not itemize their federal income taxes to deduct charitable donations at up to one-third of the standard deduction.

The Charitable Act is being supported by several lawmakers, including Michigan Senator Gary Peters. It would expand and extend the expired non-itemized deduction for charitable giving that would ensure Americans who donate to charities, houses of worship, religious organizations, and other nonprofits of their choice are able to deduct that donation from their federal taxes at a higher level than the previous $300 deduction.  

Want more?

Learn more about the Michigan Charitable Tax Credit.

Learn more about the newly introduced Charitable Act.

Learn more about MNA’s 2023 Nonprofit Day at the Capitol.