Charitable Giving is the Oklahoma Standard in Action
May 15, 2017
Last week, I found myself working with dozens of legislators, nonprofit leaders, policy experts, donors, the faith-based community and concerned citizens after a revenue-raising bill emerged that would cap itemized deductions in Oklahoma, including the charitable deduction. Our policy platform at the Oklahoma Center for Nonprofits states that charitable giving incentives are a sound and encouraging approach for Americans – and Oklahomans – to donate to the charities they support in meaningful and transformational ways. Representing the charitable sector in the state, we support legislation that preserves and protects the incentives to give to nonprofits.
The Center had to oppose this original legislation on the principle that charitable giving should be encouraged – not discouraged. And while there were a number of voices that said, “don’t worry – Oklahomans will still support their favorite nonprofits, churches and charities,” the data simply do not support that argument.
Regardless of their income level, taxpayers who receive deductions for their contributions at both the federal and state levels give generously to charities. Lower income families also give a significant percentage of their discretionary income to nonprofits. We know that given the option and ability to utilize the charitable deduction, donors will give more to charity.
A 2017 poll from Independent Sector found that 85 percent of American voters support protecting the charitable deduction. Charitable deductions give little benefit to the contributor. The real benefit of the charitable giving incentive is that gifts to charities increase, improving communities, complementing government programs, and creating jobs. For every dollar donors save on their taxes, the deduction creates $2.50 in benefits to communities. The government is unlikely to find a more efficient way to leverage private investment in services that meet our citizens’ needs.
Charitable giving also provides the foundation for funding of the charitable sector, which employs nearly10 percent of the workforce in the state of Oklahoma. Half of nonprofits with government grants match public funds with private dollars. Because 63 percent of nonprofit funding comes from private sources, we believe the incentives work to allow donors to give generously in their communities.
In short, the charitable giving incentives at both the federal and state levels don’t just encourage individuals to give to nonprofits, they encourage them to give more. Ask any executive director in Oklahoma, and they will tell you a story of a “December 31 surprise.” These are the extra gifts that donors give at the end of the year based on their tax situation. In fact, 30 percent of giving happens during December, and 12 percent occurs during the last three days of the month according to the Chronicle of Philanthropy. Network for Good, an online giving platform, estimated that in 2016, 22 percent of online gifts were made in the last three days of the year, and the peak time for online giving was Dec. 31 between 10 a.m. and 6 p.m. in the donor’s time zone.
We are thankful that donors, nonprofits, community leaders and board members contacted our legislators and reminded them of the importance of the charitable giving incentive. Lawmakers listened, and gifts to charity will now not be counted towards the proposed cap.
The charitable sector needs government to fund core in a way that ensures each and every Oklahoman has access to excellent education at all levels, health care, human services, public safety and solid infrastructure. That education should prepare them for the workforce, healthcare services should maintain a high standard of living, human services must help those who need it most, public safety systems should promote prevention, rehabilitation and equity of treatment for all citizens, and infrastructure should promote economic prosperity.
Our legislature is in a very challenging position. How do we fund these core services with such huge revenue failures year after year? Nonprofits believe that the state must find sustainable ways to support core services with adequate revenue to endure economic ups and downs but to also get our state out of the bottom of the heap when it comes to education, healthcare and human services outcomes. Nonprofits can partner with government thanks to our “boots-on-the-ground” perspective, expertise, flexibility and innovation. We hope our legislators can find a sustainable funding mechanism that will help Oklahoma thrive and support their willingness to do the tough work ahead.