The Charitable Act, a Bipartisan Support for Nonprofits

In a recent show of bipartisan support, a group of senators have called for a temporary change in tax breaks for charitable giving. The “Charitable Act”, introduced on February 28, 2023, modifies and extends the deduction for charitable contributions for individuals taking the standard deduction. Under the Act, individuals taking the standard deduction would be allowed to deduct their charitable contributions up to one-third of their standard deduction. If passed and signed into law, it would apply to the 2023 and 2024 tax years. In 2023, $13,850 and $27,700 are the standard deductions for single individuals and married couples, respectively, which means that the new deduction would be $4,617 and $9,233, respectively.

Along with the bipartisan support in the Senate, many larger nonprofit organizations support this bill, including The United Way, Goodwill, YMCA, and others. The bill has received endorsements from the National Council of Nonprofits and the Charitable Giving Coalition. A House version is expected at some point, however, there is no guarantee this will become law, especially in a divided government with budgetary constraints and competing party priorities.

With more Americans able to benefit from charitable giving deductions, nonprofit organizations dependent on donations should stand to benefit from this Act, specifically organizations that rely on small to medium-sized donations versus a few large donations from wealthy donors. Hopefully, this would incentivize Americans to support their nonprofit organizations that have been struggling due to the pandemic and other challenges while also promoting social responsibility and civic engagement.