News to Use! What Fundraisers Can Expect from the 2017 Tax Cuts and Jobs Act Expiration

Written by Gina Vaughn, Managing Consultant at Gail Perry Group.

In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), which significantly altered the U.S. tax code.

While the TCJA didn’t change charitable giving deduction limits – you could still deduct up to 60% of your adjusted gross income for cash donations – it reduced most tax rates and doubled the standard deduction to $12,000 for individual filers and $24,000 for couples.

Here’s the bombshell: Only 7.5% of Americans now itemize their taxes.

That’s down from 30% before TCJA.

While most donors report that tax policy isn’t the primary motivation to give to charity, this shows how tax policy still shapes generosity.

Let’s dive into what we’ve learned and what’s headed your way – and most importantly, how YOU can prepare.

Here’s what else we’ve learned about TCJA’s impact:

• Lower Tax Rates: Result in a higher perceived “cost” of giving, with donors feeling less incentivized to offset tax burdens through philanthropy.
• Religious Organizations: Emerged relatively unscathed, showing minimal impact.
• Other Nonprofit Sectors: Experienced noticeable decreases in giving.
• Small Donors: Those who were already taking the standard deduction prior to 2017 changed their giving behavior the least.  
• Middle-Income Donors: Those near the itemization threshold showed the biggest behavior changes.
• Lower-Income Donors: Were least impacted by TCJA (but their share of the philanthropic market is decreasing nonetheless). 

The 2017 “Giving Bump”

An interesting phenomenon occurred in 2017 – we saw a surge in giving as donors rushed to maximize benefits before TCJA took effect.

About $4 billion in donations were “re-timed” to beat the new law’s implementation.

This was followed by an expected dip in 2018’s giving growth rate.

Looking Ahead to 2025 and Beyond:

Now, we’re approaching another pivotal moment.

As 2025 draws near, some of  TCJA’s provisions are set to expire.

With potential single-party control of government branches, we might see new tax reform fast-tracked. 

And here’s the exciting part: some proposals suggest restoring charitable deductions for non-itemizers at levels that would make the COVID-era $300/$600 allowances look tiny – we’re talking about possible deductions up to $4,600 for individuals and $9,200  for joint filers.

TCJA, Trends, and What It All  Means for Fundraisers

Major and ultra-high-net-worth donors are taking center stage, wielding increasing influence over sector priorities.

While they’re harder to track (likely due to their use of complex tax structures and donor-advised funds), the trend is clear: charitable giving is becoming increasingly concentrated among larger donors.

Meanwhile, lower-income and smaller-dollar donors represent a diminishing share of total philanthropy.

Your Action Items – Start NOW!

We’re entering a new era where understanding both tax policy and donor behavior will be more crucial than ever.

Here are four ways you can stay ahead:

1. Anticipate Donor Response to TCJA Changes:

• Prepare for a potential surge in giving as donors may accelerate donations before changes.
• Develop targeted messaging about tax-expiring TCJA provisions and what this means for individual donors at various giving levels.
• Create special campaigns focused on mid-level donors who might return to itemizing.

2. Segment and Target Communications

• Focus on middle-income donors near the itemization threshold.
• Keep nurturing those major donors.
• And please, please don’t forget your faithful small-gift supporters!

3. Plan Ahead Internally and Educate Yourself

• Get ready for 2025. Watch tax legislation like a hawk.
• Create flexible fundraising plans that can adapt to different tax scenarios.
• Develop messaging about potential new charitable deductions for non-itemizers.

Bottom Line:

Tax policy shapes giving – but YOUR DONORS give because they believe in your mission.

Stay sharp. Stay focused. Stay donor-centered.

Keep sharing those amazing stories.

Keep showing that impact.

Keep building those relationships.

Your fundraising success in this new era starts TODAY!

Gina Vaughn is Managing Consultant at Gail Perry Group. Her leadership in nonprofit management, independent education, government, and fundraising spans the areas of campaign direction, coaching and training, major and principal gifts, brand management, data analysis, growth planning, corporate and foundation relations, and prospect management. She is committed to helping mission-driven organizations achieve their full potential.