Update! Tax Reform Proposals and Charitable Giving to Your Orchestra

April 28, 2017

Yesterday, the White House released an outline of tax reform proposals, while the U.S. House of Representatives rapidly crafts a detailed tax package of its own. Overarching changes to tax policy could dramatically alter the incentives for charitable giving that are a bedrock of support for orchestras and the broader nonprofit sector. While the initial impulse to make a donation comes from the heart, research shows that how much and when donors give is significantly impacted by tax policy. Orchestras, like many other charitable organizations, are able to serve communities by virtue of their tax-exempt status and the charitable giving incentives that drive private contributions. 
 

While further details are still to come, the Trump Administration's tax reform outline includes the following provisions:
  • Retains the charitable deduction. This is a very encouraging sign of support in light of prior proposals to place a specific dollar cap on the deduction of charitable gifts.
  • Doubles the standard deduction, which would simplify the tax process for many, but could reduce the share -- from 30% to 5% -- of taxpayers who are incentivized to give by claiming the charitable deduction.
  • Eliminates the federal estate tax, which has been a proven incentive for charitable giving.                                       
The League of American Orchestras and our members are actively engaged in speaking up on tax policy. Together with our partners in the Charitable Giving Coalition, the National Council of Nonprofits, and Independent Sector, we are urging Congress to ensure that, however these big moving parts of tax reform come together, tax policy will:
 
  • Preserve incentives for charitable giving by protecting the full scope and value of the charitable tax deduction.
  • Ensure that any comprehensive tax reform legislation encourages more giving by more Americans. In the context of a potential increase in the standard deduction, charitable giving could grow by giving all taxpayers the opportunity to deduct their charitable donations through a universal "non-itemizer" deduction.
On average, 40% of financial support for orchestras is derived from private contributions. These contributions support concert performances by thousands of musicians who contribute to the vitality of their communities, educational partnerships with other nonprofits and schools, and community-based programming that uses the power of music to transform lives.

Take Action
Next steps on tax reform proposals will continue throughout the coming months. We'll keep you posted as the House Ways and Means Committee unveils a detailed reform proposal, which might be released before summer begins. You 
can make a difference in this policy conversation now by letting your members of Congress know how your orchestra's service to its community could be affected if charitable giving declines, and how you could put charitable dollars to work if incentives for giving improve.
  • Meet with your elected officials when they return to their home districts and states. The League's Calendar of Opportunities can help you plan.
  • Speak up. Visit the League's Tax Policy Advocacy Center for a two-page backgrounder, talking points, and a sample message to personalize with information about your orchestra.