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Report: Tax changes may cut donations to charities



HARTFORD — A new report on charitable giving in Connecticut raises alarms that federal tax changes and the state government’s financial troubles will reduce donations to state charities.

The Connecticut Council for Philanthropy expressed that concern in its annual report Tuesday on giving by individuals, bequests and foundations, as well as philanthropic trends and insights.

The report said individuals and charitable foundations in the state gave a record $5 billion in 2015, the most recent year for which data is avail- See GIVING , Page 4A

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able. It represented an increase of 11 percent over 2014.

Yet, despite this record, the annual accounting also glumly reported that the numbers of charitable givers in the state has been on a slow decline, and this downward trend will likely continue as the new federal tax laws take effect. The report said the numbers of Connecticut residents supporting charitable groups has declined 10 percent since 2005 The Connecticut Council for Philanthropy also cited state’s budget outlook as a cause for concern.

The legislature’s Office of Fiscal Analysis most recently estimated deficits of $1.9 billion and $2.5 billion for the upcoming two-year budget cycle for the 2020 and 2021 fiscal years that the next governor and General Assembly will have to close.

“At CCP, we have concerns that new federal tax laws and the state’s fiscal status could depress future charitable giving. These issues, combined with state and federal cutbacks, could pose serious threats to the financial health of Connecticut’s nonprofit organizations, particularly those serving those most in need,” the report said.

The Connecticut Community Nonprofit Alliance has also expressed its worries that charitable contributions to its more than 500 members will suffer.

The shared concern is charitable giving will decline because President Trump and Republicans in Congress eliminated most itemized deductions on the federal income tax as part of the federal Tax Cuts and Jobs Act that was enacted in December. The federal tax changes left the charitable deduction uncapped, though.

According to the most recent IRS data, 608,240 tax returns filed from Connecticut claimed nearly $3.5 billion in charitable contributions in 2015.

The Connecticut Council for Philanthropy is apprehensive that the 2017 tax changes will particularly depress charitable giving among middle- and low-income tax filers who had been itemizing their deductions. It noted the state average of 41 percent of itemizers was higher than the national average of 30 percent. This is sparking concerns that charitable giving could fall more dramatically here than compared to other states.

“This possibility raises concerns about charitable giving in the state and its potential impact on the financial sustainability of the state’s nonprofit organizations,” the report said.

In 2015, individual giving set a new high of nearly $3.5 billion, up 2.3 percent from $3.4 billion in 2014, CCP said. Over the previous 10 years, individual giving increased $658 million, or 23 percent. Since 2012, giving has remained relatively flat.

The bulk of the 2015 increase was the result of bequests, but the report said bequests represent the most unpredictable source of charitable donations. Bequests increased from $90 million in 2014 to $330 million in 2015. In contrast, individual giving on its own grew a modest $77 million.

Giving by Connecticut’s 1,669 foundations grew 17 percent to $1.2 billion, and out-of-state foundations donated $419 million to Connecticut nonprofits, the CCP said..

Established in 1969, the CCP is comprised by foundations, business and corporate giving programs, bank trusts, donor-advised funds, individual philanthropists, and those serving the philanthropic sector.

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