First and foremost, happy Easter, Passover and hopefully, spring to everyone!
The Huddleston Group would also like to welcome Cypress College, Fullerton College, Community College Foundation of North Orange County, North Orange County Community College District, Mesa Community College and Humanities Montana to our growing list of clients.
I wanted to follow up on our blog from last month regarding the new tax law and its effect on charitable giving from the corporate world point of view. But first, let me give some background information. In 1999, when that tax bill was presented to Congress, the media again went public and predicted the end of charitable giving as we knew it only to be rebuffed by this Philanthropy Roundtable article:
When Uncle Sam takes, do Americans give?
Philanthropy Roundtable – 1999
Before charitable groups rush to team up with H&R Block, the realtors, mortgage bankers, municipal bond traders, accounting industry, and nation’s multitude of tax attorneys and lobby against a reform of our current 8,000-page tax code, here is some reassuring news. Independent Sector’s (IS) track record in predicting the impact of tax changes on charitable giving has been wrong in the past every time. During the debate over the Tax Reform Act of 1986, IS predicted that the reduction in tax rates in that act would trigger an $8 billion decline in charitable contributions in 1987. Instead, charitable giving rose by $6.4 billion, or 7.6 percent, in 1987 after the top tax rate fell from 50 percent to 28 percent. Alan Reynolds of the Hudson Institute has noted that IS actually underestimated the impact of the 1986 tax reform act on charitable giving over the period 1987-94 by a gigantic $40 billion. Oops.
In this most recent study, Independent Sector and the Council on Foundations commissioned the Washington tax division of Price Waterhouse (PW) to run computer simulation models on how tax changes might affect giving. This is like asking Phillip Morris to prepare a study on the economic impact of abolishing cigarettes. Having worked in the trenches over the past four years on the flat tax and sales tax, I can personally attest to the fact that virtually every major accounting firm is an aggressive adversary of tax simplification. (end)
I agree with the Philanthropy Roundtable then and now when it comes to the current tax law. But what about corporate giving? Well, let’s take a look. Corporate giving has been stuck at 5% for more than 30 years. Why is that? Maybe this will shed some light:
| US Corporate Tax Year | Tax Rate | % of Total Charitable Giving |
| 1995 | 35% | 5% |
| 2005 | 35% | 5% |
| 2016 | 35% | 5% |
As you probably know, the new Tax Act has cut the corporate tax rate from 35% to 21%. What was the first thing those money hungry corporations did with this information?
More than 318 companies (involving more than 4 million US employees) have given bonuses and increased their minimum wage. These companies have invested in research and development; committed to building new facilities; brought billions of off-shore dollars back to the US; and even hired more employees – just to name a few changes. The most amazing part about all of this is that their tax savings haven’t even kicked in yet!
There is one more thing: the following is just a partial list of companies starting or taking their charitable giving to the next level because of the new tax reform act.
Companies Starting or Increasing Current Charitable Giving By Amount
Ally Financial, Inc. – $6 million
Altria Group, Inc. – $35 million
American Family Insurance – $10 million
BB&T – $100 million
Berkshire Hills Bancorp, Inc. – $2 million
Best Buy – $20 million
BMO Harris – 10% increase in 2018
Boeing – $100 million
Brown-Forman Corporation – $60 to $70 million
Citizens Financial Group – $10 million
Commerce Bank – $25 million
Customers Bank – $1 million
Ecolab, Inc. – $25 million
F.N.B. Corporation – $5 million
First Midwest Bancorp, Inc. – $2 million
Fulton Financial Corporation – $2million
Gate City Bank – $1 million
JPMorgan Chase & Co. – $1.75 billion over 5 yrs.
M&T Bank Corporation – $50 million
MB Financial, Inc. – $7 million
Meridian Bancorp, Inc. – $1 million
PNC Financial Services – $200 million
Regional Financial Corporation – $40 million
Southwest Airlines – $5 million
SunTrust Banks, Inc. – $50 million
Umpqua Holdings Corporation – $2 million
US Bancorp – $150 million
Visa – will increase employee match by 200%
Webster Financial Corporation – $1 million
Wells Fargo – $400 million
Zions Bancorporation – $12 million
Companies Starting or Increasing Current Charitable Giving
1st Summit Bank
Advance Financial
Aflac
American Express
Apple
AT & T
BancorpSouth Bank
Black Hills Energy
Central Bancompany, Inc.
Cigna Corporation
Comcast
Discover Financial Services
ES Bancshares, Inc.
Evans Bancorp, Inc.
Exxon Mobil
Fidelity Bank
First Farmers Bank & Trust
First Federal Community Bank
Flemington Car & Truck Family of Brands
Great Western Bancorp, Inc.
Gulf Coast Bank & Trust Company
Home Bancshares, Inc.
Hostess Brands, Inc.
Humana
Jordan Winery
Kish Bancorp, Inc.
Lawrence Paper Company
Merck
Mountaire Corporation
NBT Bancorp, Inc.
NexTier Bank
Peoples Bank
Saban Capital Group, Inc.
SkyWest Airlines
State Street
TCF Financial Corporation
The Charles Schwab Corporation
Thermo Fisher Scientific
Tri-State Trailer Sales, Inc.
Unity Bank
Wal-Mart
YAM Worldwide
Americans for Tax Reform, found at www.atr.org/list
Charitable giving is not about income tax deductions – it is about relationship-building between your donors and your institution. Whether you’re talking about an online donor who makes a $25 gift, a married couple that donates $100 annually to your special event, a major philanthropist who gives $1 million to your capital campaign, the couple that left you in their estate plan, or a corporation that buys a table at your gala or funds a scholarship – in some way, you have built a relationship with each of them, which motivated them to give.
It’s a simple concept; it’s not rocket science. Building a long-term, mutually beneficial relationship with a donor involves the same qualities as those needed to forge a strong friendship – trust, authenticity, communication, and integrity – not a charitable income tax deduction.
Remember, at its essence charitable giving is all about making friends and communicating a need in a persuasive way that compels people to help meet that need.
Use the new Tax Reform Act, to build more relationships, many Americans will have a few more dollars to invest in your mission.
Please view this YouTube video – I think you will be moved and enlightened about charitable giving. Click here: Why we make Charitable Gifts
Give us your comments and if you have an organizational or fundraising question you would like us to answer in one of our blogs please drop us a note. I hope you have found this useful for your planning and if I can be of any further assistance please give me a call or drop me an email.
Ron Huddleston, FAHP, CFRE
President
The Huddleston Group
