Charitable Giving Could Decrease by $13.1 Billion
New research is pointing to the impact of three major potential policy changes on charitable donations and government tax revenue.
The study, commissioned by Independent Sector and performed by the Indiana University Lilly Family School of Philanthropy, used the 2014 Tax Reform Act introduced by then-House Ways and Means Committee Chairman Dave Camp (R-MI) to estimate the potential effects of tax policies on charitable giving. Using the University of Michigan's Panel Study of Income Dynamics (PSID), the largest and longest running panel study in the world, the scenarios examined were similar to those currently up for consideration through the White House proposal and the House Blueprint Proposal, and included:
- Increasing the value of the standard deduction from $6,300 to $11,000 for individuals and from $12,600 to $22,000 for joint filers (the White House and House Blueprint proposals increase the standard deduction to $12,600/$24,000 and $12,000/$24,000 respectively).
- Decreasing the highest marginal tax rate from 39.6% to 35% (the White House proposal also drops the rate to 35%, and the House Blueprint drops it to 33%).
- Extending the charitable tax deduction to all non-itemizers.
The report is well worth the read (particularly if tax-price elasticity and endogeneity capture your interest), but if you're short on time, highlights from the research include:
- Current tax reform proposals would significantly decrease charitable giving, by as much as $13.1 billion (around 4.5%). The current proposals - without an expanded charitable deduction -include an increase in the standard deduction and a decrease in the top marginal tax rate and according to the analysis will cause a decrease in giving anywhere between $0.9 and $13.1 billion nationwide. A staggering loss, even on the lower end of the threshold. But, it's not all bad news:
- Expanding the charitable deduction would increase giving by as much as $4.8 billion (1.7%). When combined with current tax reform proposals, making the charitable deduction available to all taxpayers including non-itemizers more than offsets the charitable giving lost by the other reform proposals and will increase giving between .4 percent and 1.7 percent. Taking a closer look at expanding the charitable deduction to all taxpayers, further insights include:
- Expanding the charitable deduction has minimal impact on tax revenue, of the proposals under consideration. If you take a look at extending the charitable deduction to non-itemizers as a standalone provision (and not increase the standard deduction or lower tax rates), charitable giving would increase by as much as $12.2 billion and would decrease revenue by .4 percent to .5 percent. For perspective, all three proposals combined would decrease revenue by an estimated 3.8 percent.
- Expanding the charitable deduction would increase charitable giving the most for low-income and middle-income households. Making the charitable deduction available to non-itemizers shows the most growth by low-income (<$50,000) and middle-income ($50,000-$99,000), both with the potential to grow their giving as much as 8.4%. High-income households ($100,000+) could see as much as a 1.6 percent increase in contributions.
Individual giving represents the vast majority of total giving in the U.S., with a reported $264.58 billion of the $373.25 billion in donations in 2015 coming from individuals. In comparison, $58.46 billion came from foundation giving, $31.76 billion from charitable bequests and $18.45 billion from corporate giving, according to Giving U.S.A.
We know through charitable donations reported to the IRS that the average Michigan household donates about 3 percent of their income to charity, and charitable deductions totaled $4,982,976,000 in 2014. (If you're looking for an interesting visual, MLive has a searchable map by county highlighting 2014 charitable giving by income bracket). While the tax reform up for consideration may have an unintended negative impact on charitable giving, expanding the charitable deduction to all taxpayers would more than offset this loss.
With millions of dollars to Michigan's nonprofits at stake, CMF continues to advocate in favor of an expanded charitable deduction in partnership with our national colleagues.
Read the full report.
Read an article by the Chronicle of Philanthropy about the study.
The Opioid Crisis: An Update
Our state is battling an opioid crisis that’s at epidemic levels. A new study has ranked Michigan as 10th in the nation as a drug “problem area.”
Statewide data shared at the Institute for Public Policy and Social Research’s recent forum, shows that opioid substance abuse isn’t isolated to rural or urban areas, it’s everywhere in our state.
There’s currently legislation in Lansing aimed at addressing the opioid crisis. If passed, it would require Michigan doctors to check with Michigan Automated Prescription System (MAPS) before prescribing a controlled substance.
The state rolled out the new MAPS last month to give prescribers a user-friendly database to view if controlled substances have previously been prescribed to a patient.
Supporters of the legislation say requiring doctors to refer to the system would “decrease the number of opioid-related overdose deaths, eliminate doctor shopping, and limit the number of excessive pills for misuse.”
“Opioid-related overdoses are skyrocketing nationwide, and unfortunately, Michigan’s overdose death rate is one of the highest in the nation,” Senator Tonya Schuitmaker, who introduced the legislation, said.
Our state has seen a surge in the number of prescriptions that contain opioids, from 180 million units in 2007 to 690 million units in 2016.
The latest data shows nearly 2,000 people in Michigan died due to drug overdoses in 2015, a 13 percent increase from the previous year.
As CMF reported in October, over the course of 15 years, there was a shocking 911 percent increase in opioid and heroin deaths in Michigan. With the rise of both opioid and heroin use, the question of equity is raised, as some view the response to the opioid crisis (higher cost narcotics available in mainstream outlets compared to heroin) to be disproportionate to the heroin response.
Our state was recently awarded $16 million in federal funding to support the MAPS, as well as a statewide awareness campaign, prevention services and more.
Governor Rick Snyder calls the legislation in the works promising but says more interventions are needed in communities throughout Michigan, calling on all Michiganders to get involved.
The issue in Michigan is one facing states around the country, earlier this month our state was one of the stops for members of President Donald Trump’s administration, as they met with Snyder in Lansing to discuss the issue and share the president’s plans to address the opioid crisis.
The president recently signed an executive order to establish a commission to combat the growing problem.
The Office of Foundation Liaison (OFL) is monitoring the State of Michigan's work on this issue and CMF will keep members posted on activities, issue, and opportunities for partnership as they arise, including a webinar featuring issue-area experts this summer.
“With a commitment from the executive office, new legislation and a sophisticated data/oversight system, the opportunity for partnership between the state and philanthropy is strong,” OFL shared.
What’s Happening on the Island
Philanthropy, business and education leaders and lawmakers are heading to Mackinac Island next week for the Mackinac Policy Conference.
This year’s policy conference will focus on shaping conversations around polarizing topics that can bring everyone to the table; shrinking the opportunity gap and capitalizing on Michigan’s strength to be a technology leader.
Crain’s Detroit Business reports that Governor Rick Snyder is expected to outline his policy recommendations from the state’s 21st Century Economy Commission report and discuss the recommendations from the education and infrastructure commissions’ reports.
“I think what unites all three reports is a sense that Michigan has tremendous assets, but trend lines are not necessarily in Michigan's favor unless we kind of grab the tiller and start making some course corrections to some of the demographic and other trends that we see coming in the future,” Sandy Baruah, president and CEO, Detroit Regional Chamber told Crain’s.
Michigan philanthropy will be represented throughout the conference, with several CMF members hosting events and sharing insights and information on education, creating economic opportunities, addressing our state’s opportunity gap and more.
The Skillman Foundation is hosting a session to share what business leaders need to know about the Detroit Public Schools Community District (DPSCD) and how they can help the district prepare students for success. The district’s incoming superintendent, Nikolai Vitti, will be on the panel to discuss DPSCD’s new path and strategies.
The Charles Stewart Mott Foundation is hosting a panel to discuss what our state needs to examine in terms of city funding to move toward building greater economic opportunities.
W.K. Kellogg Foundation and The Kresge Foundation are hosting a session on Detroit’s Early Childhood Partnership to highlight the need for high-quality early learning and child care initiatives.
Several of CMF’s corporate members are also sponsoring sessions to bring in thought leaders to discuss how our state can work towards building a more equitable and prosperous future for all Michiganders.
If you can’t make it to the island, you can follow all the action online, May 30 to June 2. Detroit Public Television will provide live and recorded coverage of the speakers throughout the conference. Here are philanthropy-led topic areas worth tuning in to:
5/31 9:00 a.m. - Skillman Foundation will host Rebuilding Detroit Schools for Tomorrow's Opportunities
5/31 10:30 a.m. - C.S. Mott Foundation will host Funding Michigan Cities: The Path Forward
5/31 noon - Governor Snyder officially launches the conference
6/1 noon - W.K. Kellogg Foundation and The Kresge Foundation will host Hope Starts Here: Detroit's Early Childhood Partnership
6/1 2:55 p.m. - Ford Foundation President Darren Walker will be interviewed
6/1 4:15 p.m. - The W.K. Kellogg Foundation and The Kresge Foundation will host Closing the Opportunity Gap for Michigan's Children
Check out the full agenda.
Follow the Detroit Chamber on Twitter for up-to-date information from the conference.
Follow Detroit Public TV on Twitter for conference coverage.
Jackson National Life Insurance Company launches new corporate foundation and announces financial education initiative
Content excerpted from a Jackson Charitable Foundation press release. Read the full release here.
Jackson National Life Insurance Company, a CMF corporate giving member, recently launched the Jackson Charitable Foundation.
The foundation’s mission is to advance financial knowledge on a national scale. The foundation will support educational programs designed to accelerate substantial measurable progress in improving how people manage, protect and grow their personal finances.
The Jackson Charitable Foundation’s first initiative is the U.S. rollout of Cha-Ching Money Smart Kids, a program that teaches basic money concepts to kids through a series of short music videos showing animated characters making financial decisions.
The program is designed to help kids ages 7 to 12 develop good financial habits early in life so they can reach their personal financial goals in the future.
The foundation is providing nearly $3 million to share Cha-Ching with students nationwide through partnerships with Discovery Education and Junior Achievement USA.
“Jackson’s 5,000 U.S. associates work in a professional capacity every day helping Americans achieve financial security and freedom,” Danielle Robinson, executive director of the Jackson Charitable Foundation said. “Jackson is a longtime leader of community giving and employee volunteering, and we’re excited to extend our impact into schools across the country.”