Charitable Giving

Because of the lack of state support, private colleges and universities in particular rely strongly on charitable gifts to sustain student financial aid and minimize tuition increases.

Without significant charitable contributions, many colleges and universities could not maintain their core missions – including ensuring access to their institutions, particularly for low-income students.

Private charitable donations also support research, teaching, technology, and the public service activities that economically benefit society.


The federal government has long supported and encouraged gifts to charities by providing various tax incentives.  The charitable deduction, which has existed for over 100 years, was created to support public purposes, charitable and educational efforts, and to advance the common good.

There are additional incentives, like the IRA Charitable Rollover and two temporary incentives, to spur charitable giving that were included in pandemic stimulus bills.  New initiatives, like a universal charitable deduction, is being pushed by the nonprofit community and has caught the attention of Congress.

Threats still loom, however.  For example, the private college endowment tax discourages donations to private colleges hit with this tax because of the mandatory payment these institutions have to make to the federal government.  Donors may not want their gifts to be absorbed by the IRS rather than going toward campus needs.  Also, there are proposals to limit the charitable deduction, and Congress renewed the so-called “Pease” limitations on charitable giving in 2013, which limit the value of charitable donations for high-income taxpayers. 

IRA Charitable Rollover

While the charitable deduction has been around since 1917, the IRA Charitable Rollover was initially enacted in 2006, and allows individuals age 70½ and older to make tax-free gifts from their retirement accounts directly to charities.  Gifts are limited annually to $100,000 per individual.  Starting in 2015, the IRA Charitable Rollover became a permanent tax benefit after almost 10 years of existing as a temporary, often expired, tax benefit. Since the IRA Charitable Rollover is not indexed for inflation, enhancing the benefit by lowering the age of eligibility and increasing the annual contribution limit would allow more gifts to more nonprofits.

Covid-19 Pandemic Charitable Giving Provisions

The CARES Act created two new charitable giving tax benefits to try and help nonprofits during the pandemic, and the second stimulus bill signed into law by President Trump, CRRSA, extended them fro an additional year. 

First, the CARES Act created a temporary above-the-line deduction for cash donations of $300 per tax return for 2020. This benefit is only available to non-itemizers who claim the standard deduction ($12,400/single, $18,650/head of household, $24,800/married joint filers).
Second, for those who itemize, the bill lifts the existing cap on annual cash contributions to charities, raising it from 60 percent of adjusted gross income to 100 percent. While both benefits are only in effect through 2021, excess amounts of cash contributions to charities can be carried forward for 5 years.

Universal Charitable Deduction

Building on the pandemic provisions in 2021, bipartisan legislation was introduced in both the House and Senate to further increase the caps on the deduction and make additional improvements.  The Universal Giving and Pandemic Response and Recovery Act (S. 618/H.R. 1704) would further raise the $300/$600 cap on the charitable deduction to $4,000 for individuals/$8,000 for married or joint filers.  It would also extend the availability of the deduction through 2022, and eliminate the current exclusion of gifts to Donor Advised Funds.

What You Can Do

Contact your Senators and Representative and their staffs to let them know how important the charitable tax benefits are to your institution. Tell them:

  • THANK YOU for supporting the IRA charitable rollover.  To make it even more beneficial, the age limit should be lowered, and the annual gift limit increased.
  • THANK YOU for supporting the charitable deduction. 
  • THANK YOU for the charitable giving incentives in the pandemic stimulus bills. Please support passage of the Universal Giving and Pandemic Response and Recovery Act (S. 618/H.R. 1704).


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