The 2017 tax law has changed the incentives for making charitable donations, causing anxiety among some small private colleges. But the changes have yet to have a noticeable impact on alumni giving at Simmons University in the Fenway section of Boston.
"Everybody is concerned when tax changes happen,” said Marianne Lord, vice president for advancement at Simmons. “In my experience, we've always found, kind of like the new millennium, it was a disaster scenario and then it didn't happen."
The tax law nearly doubled the standard deduction, making it less likely that people of modest means can deduct relatively small donations. This year, the standard deduction rose from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples. There is disagreement over whether those changes will reduce donations to colleges and other nonprofits.
"We know from many, many years of research that the tax incentives for charitable giving actually makes a difference, particularly on the margins," said Dan Cardinali, president and CEO of Independent Sector. The national membership group surveyed 975 registered voters about their giving and found 35 percent of voters who filed itemized returns last year say they will stop giving, or give less, this year.
Cardinali suggested that estimate is low.
“When you ask individuals about their benevolent behavior, they tend to overstate how benevolent they are,” he said. “It's kind of human nature.”
Even before the new tax law passed, fewer American were giving. Between 2000 and 2014, household giving dropped by 11 percentage points. There are no data yet on alumni giving in 2018, but tax policy experts say colleges should be concerned.
"Now, the vast majority of Americans get no tax benefits for their charitable giving," said Ray Madoff, who teaches at Boston College Law School and directs the Forum on Philanthropy and the Public Good.
In the past, Madoff said, changes in the tax law have decreased donations.
"For example, when the estate tax was repealed for one year, charitable giving went down by 30 percent," she said.
Overall donations to higher education institutions have stayed constant in recent years, hovering around $22 billion. The wealthiest Americans, like Michael Bloomberg, tend to give large sums to a small number of elite schools. Since 2014, there has been a 27 percent increase in contributions to donor-advised funds, which operate like charitable checking accounts for the rich.
Madoff said that is a problem.
"There is no time frame during which the donors are required to contribute those funds to charity,” she said. “Higher education institutions need to look at their fundraising and see: Is it really keeping up with donor-advised funds? The donor-advised funds like to say that they are increasing overall charitable giving, but our numbers don't show any evidence of that."
In upstate New York, Fred Rogers is director of annual giving at Hamilton College, where more and more high-end donors are giving through donor-advised funds, distributing their gifts over time.
"Money is money, so we're happy to get it any way we can,” said Rogers, who, initially, was worried about the potential effects of the new tax bill.
"But then I fell back into my core understanding of philanthropy, which is that people give because they want to give and tax considerations are secondary," he explained.
Rogers said Hamilton is experiencing a sluggish semester of fundraising, but, so far, his philosophy seems to have played out since the law went into effect.
"I can't say that I've observed any people not giving because of the tax implications of the law," Rogers said.
At stake is not just the financial health of colleges, but also academic prestige. The percentage of alumni who give is one factor in the U.S. News & World Report college rankings.
Correction: A previous version of this story incorrectly identified Simmons University as Simmons College.
