By Connor Semelsberger, MPP
Churches and other charitable organizations have been on the front lines of the coronavirus response. A few examples are Samaritan’s Purse building a field hospital in New York City’s Central Park and churches hosting food drives and conducting coronavirus testing. One Alabama church tested 1,000 people in two days! Despite the active role these nonprofits have taken in meeting the health and economic needs of our country, they still rely on donations—at a time when many Americans face financial hardship due to job loss, limited working hours, or increased medical costs. Such hardships may lead to a decline in charitable donations. Thankfully, some leaders on Capitol Hill are championing the important role churches and charitable organizations play in helping local communities.
One way the tax code helps charitable organizations is through the charitable deduction. However when the 2017 Tax Cuts and Jobs Act simplified and raised the standard deduction to $12,000, it caused many tax filers to take the standard deduction instead of itemizing their charitable contributions. Realizing this problem in the tax code, Congress recently passed the CARES Act, which allows charitable contributions up to $300 to be deducted above and beyond the standard deduction on annual tax returns. This new policy is a great first step in promoting charitable giving during the pandemic. But congressional leaders believe there is much more to be done.
Senator James Lankford (R-OK) has been the most vocal voice advocating for direct changes to the tax law to support both families and nonprofits. He summed this need up perfectly in a Joint Economic Committee hearing on charitable giving. “We have three safety nets in America. The family is the first safety net. Nonprofits are our second safety net and government is our third…The first two are essential and if the family collapses, nonprofits struggle to keep up and governments struggle to keep up.”
In May, Senator Lankford and Senator Angus King (I-ME) co-authored a letter to Senate leaders, advocating for nonprofits, charities, and houses of worship in any future coronavirus relief bills. One of the specific proposals Lankford and King offered is raising the $300 charitable deduction limit in the CARES Act to one-third of the standard deduction. This would equate to $4,000 for individuals and $8,000 for married couples. Representative Mark Walker (R-NC) has taken a similar approach in the House of Representatives. His bill, the Coronavirus Help and Response Initiative Through the Year 2022 (CHARITY) Act, would expand the charitable deduction to one-third of the standard deduction until 2022.
Families and churches are the foundation of our society. They are, therefore, the societal institutions best-equipped to provide stability when America faces many health and safety challenges. When families and churches struggle, so does the rest of America. That is why the government needs to recognize and support these institutions and charitable organizations. As Sen. Lankford said, “it’s beneficial for us in our official policy and what we choose to do in the tax code to be able to create a tax code that is encouraging to families and that is encouraging to nonprofits.”
Connor Semelsberger, MPP is the Legislative Assistant for Family Research Council.