Scholarship of Discovery
The Tax Cuts and Jobs Act (TCJA), passed in 2017, significantly altered individual’s taxes for all filing statuses, notably increasing the standard deduction. By nearly doubling the standard deduction, it considerably decreased those individuals choosing the itemized deduction. Due to this, it may impact charitable contributions, a major source of nonprofits’ revenues. Prior studies projected a variety of stances regarding changes in giving levels due to the TCJA. This study attempted to determine the overall effect of the TCJA on nonprofits, as well as within the National Taxonomy of Exempt Entities (NTEE) major groups Education, Health, Human Services, Public and Societal Benefit, and Religion Related.
This study utilized paired t-tests to determine if a statistically significant positive difference in charitable contributions occurred post-TCJA. Additionally, ANOVA analysis was used to determine if the TCJA’s effects were widespread or more material to a selected segment.
All t-tests performed evidenced no statistically significant positive difference in charitable contributions before and after the TCJA. All ANOVA tests were rejected at the 99% level of confidence, showing that there were statistically significant differences in charitable contributions between groups.
The findings of the t-tests are in alignment with prior research that indicated no change in overall giving as a result of the TCJA (Hodge, 2020). Though we failed to reject all of the t-tests, the Public and Societal Benefit tests displayed p-values less than .01, which may evidence greater contributions post-TCJA in that sector. Following the ANOVA analysis, post hoc tests identified one nonprofit within each NTEE group that received significantly greater contributions. These nonprofits were Teach for America, American Lebanese Syrian Associated Charities Inc/St. Jude Children’s Research Hospital, Feeding America, The Rotary Foundation, and Samaritan’s Purse.
Keywords: Tax Cuts and Jobs Act, TCJA, charitable contributions, standard deduction, itemized deduction, charitable contribution deduction
Drenth, Megan, "Effects of the Tax Cuts and Jobs Act of 2017 on Nonprofits’ Charitable Contributions" (2022). Honors Program Projects. 136.
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