Examining Charitable Giving and Trends in the Nonprofit Sector
March 17, 2022, 10:00 a.m.
United States Senate Committee on Finance
Randall L. Rutta
Chief Executive Officer
1730 M St NW, Suite 500
Washington, DC 20036-4561
Chairman Wyden, Ranking Member Crapo, and Members of the Committee on Finance, on behalf of the National Health Council (NHC), I am writing to share our perspective on charitable giving trends and potential policy solutions to strengthen the nonprofit sector, one of the most vital employment sectors, creating good-paying jobs and providing needed services and supports to the American public.
Background on the NHC
Created by and for patient organizations more than 100 years ago, the National Health Council (NHC) brings diverse organizations together to forge consensus and drive patient-centered health policy. We promote increased access to affordable, high-value, sustainable health care. Made up of more than 145 national health-related organizations and businesses, the NHC’s core membership includes the nation’s leading patient organizations. Other members include health-related associations and nonprofit organizations including the provider, research, and family caregiver communities; and businesses representing biopharmaceutical, device, diagnostic, generic drug, and payer organizations. To learn more about the National Health Council, visit www.nationalhealthcouncil.org.
We thank you for the opportunity to submit our statement ahead of the Congressional hearing and look forward to providing further support to the nation’s nonprofit sector, particularly the patient advocacy community.
Importance of the Patient Advocacy Community
Charitable nonprofits are essential to our country’s economic and social wellbeing. The COVID-19 emergency has highlighted the importance of nonprofit organizations as they have risen to the challenge of responding to the health and other trials the pandemic has presented. The patient advocacy community has particularly stepped-up, providing services and information to people with chronic conditions and disabilities as well as advocating for the health and safety needs of their communities. However, the pandemic has also presented many challenges for patient organizations. These include reduced giving, cancellation of fundraising events and meetings that are necessary for organization’s financial health, a decreased workforce, loss of volunteers, and more. As we emerge from the pandemic, we urge Congress to undertake efforts to both help the nonprofit community recover from the effects of the last two years as well as address issues affecting nonprofits that existed before the pandemic.
Charitable Giving Incentives
Incentives for charitable giving are needed more than ever as nonprofits respond to the health and economic crises and will be critical in the future as patient organizations play an essential role in recovery efforts.
In 2018 the standard deduction was doubled, which resulted in a significant decrease in the number of taxpayers choosing to itemize their deductions. This, in turn, disincentivized charitable giving, resulting in reduced nonprofit revenue. Individual giving declined 3.4% in 2018 adjusted for inflation, according to Giving USA 2019: The Annual Report on Philanthropy for the Year 2018. We are grateful for the temporary increase in the charitable giving deduction above the standard deduction in COVID relief legislation. This increase incentivizes giving by small donors, who are the backbone of many patient advocacy organizations. We urge Congress and the Administration to renew the universal charitable (deduction for non-itemizers and significantly increase the cap on the deduction, as proposed in the bipartisan Universal Giving Pandemic Response and Recovery Act (S.618/H.R.1704). Similarly, we call on policymakers to extend two additional disaster-relief giving incentives that expired on December 31, 2021 – the provision permitting individuals who itemize to deduct charitable donations up to 100% of their adjusted gross income and the measure allowing corporations to deduct charitable donations up to 25% of taxable income.
Addressing The Nonprofit Workforce
The nonprofit sector is the third largest employment sector in the country. The economic toll of COVID-19 is clear and has a direct impact on the ability of nonprofits to play the vital role they fulfill in our communities. As of December 2021, there are 450,000 fewer employees in the nonprofit sector as charitable organizations report significant difficulties retaining staff and filling vacancies. The impact of the shortages can be seen in virtually every community as nonprofits are forced to restrict needed services, institute waiting lists, or close operations entirely. We call on Congress to retroactively restore the Employee Retention Tax Credit, as proposed in the bipartisan ERTC Reinstatement Act (H.R. 6161/S. 3625), extend this refundable payroll tax credit through 2022. We also ask Congress to modify nonprofit eligibility beyond the current “gross receipts” test and definition of eligible payroll expenses to include child care and education subsidies to reflect the increased costs charitable organizations experienced as they struggle to maintain or expand services to meet local needs throughout the health and economic crisis. In addition, we ask that any relief package should also include core components of the Work Opportunities and Resources to Keep Nonprofit Organizations Well Act, or WORK NOW Act (S. 740/H.R. 1987), which would infuse funds into the nonprofit community across the country to get people back to work and make sure nonprofits are able to meet the needs of the populations they serve.
The NHC would like to thank the Committee on Finance for their support of the nonprofit community. The NHC is ready to work with Congress in any capacity necessary on the issues pertaining to the health of nonprofits. Thank you for the opportunity to provide the perspective of the NHC and, by extension, millions of people with chronic conditions and disabilities in the U.S.