LEILA FADEL, HOST:
You may have noticed an uptick in emails before the new year imploring you to give money to a charity or nonprofit. That's because the deadline to get tax credit for your charitable giving was December 31. A recent report from Giving USA found that in 2018, charitable giving by individuals fell by a full percent. In just one example, The Washington Post reported in late November that food banks and charities all around the nation's capital were seeing drops in donations of food, money and clothing, all during a holiday season in which people are usually more generous. That comes against the backdrop of a national spike in homelessness and more families relying on some form of charitable assistance. Changes in the tax law in 2017 may be behind some of this decline in generosity, but there are other factors at play, too.
Stacy Palmer's with us in the studio - editor of The Chronicle of Philanthropy - for more insight. Thanks for being here, Stacy.
STACY PALMER: Happy to join you.
FADEL: So first, can you explain the significance of the deadline that just passed on December 31?
PALMER: Well, it's a little less significant than it used to be. We all remember thinking that - we all want to get those charitable deductions in. And so many of us rushed to write our donations by December 31. But with the change in the tax law, only about 8% of Americans have access to the charitable deduction anymore. So it's not nearly as important. But you certainly couldn't tell that from all of those emails that we all got.
FADEL: The amount of money donated to charity overall has stayed relatively flat, but the percentage donated by individuals versus foundations and corporations - that's down?
PALMER: Individuals is down in a significant way, in particular. And individuals are really important because they provide 70% to 80% of all the contributions in this country.
FADEL: Oh.
PALMER: We hear about Bill and Melinda Gates Foundation, Ford Foundation. Those kinds of organizations give about 15% of contributions. But it's us as individuals - we have a lot of power. And when we stop giving, that has a big impact on charities.
FADEL: So why are people giving less? How much does this tax code change have to do with it?
PALMER: Part of it is the tax code. It's also - when you think about wage growth, that hasn't been very high for most people. So even though people are employed, if you're working two jobs and you feel like you need all of that money for your family, you may not have as much room to give to charity. So I think we're still seeing a middle-class squeeze, and that's affecting charitable giving.
It's a little bit, too, because as people grow less interested in religion - religion is something that's very important to charitable giving - not just people giving to churches. But usually, people who are religious give to lots of other causes. So it's a whole range of causes - not just one single thing. And that's what makes it more complicated.
FADEL: Right. So when we look at how nonprofits are affected, which ones seem to be bearing the brunt of the dip?
PALMER: That's one of the most important things to think about in this dip is that it's very uneven. You know, overall, colleges and hospitals are doing really well in their fundraising. Very big nonprofits are seeing increases. But it's smaller local, community-based nonprofits. It's youth groups, social services groups. Those are the ones that have been hit the hardest. And that's in part because middle-class donors, the ones who lost those tax breaks, the ones who are falling out of that habit of giving - they're the ones that give the most generous support to those kinds of organizations.
FADEL: But that's also the people that are closest to the ground and helping people in your community. That's a real devastating impact, then.
PALMER: Exactly. It's a very disturbing one. And it's one that we need to find some way to call attention to because it's hard for these small groups. They don't have big marketing budgets. They're not going to be able to get the word out. It's all of us talking about it and saying, these groups understand what the community needs. And we have to find some way to help them.
FADEL: Stacy Palmer is editor of The Chronicle of Philanthropy. Thank you so much.
PALMER: Thank you for having me.
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