Charitable Giving Declines as Tax Laws Discourage Donations

Americans gave a record $592.5 billion to charity in 2024, yet the number of households actually writing those checks keeps shrinking. Roughly two thirds of families donated to charity in the early 2000s. Today that figure has slipped below half, and the main culprit is a tax code that quietly stopped rewarding everyday giving.

How the 2017 Tax Overhaul Changed the Math

The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, and that single change reshaped charitable giving in the United States. Once the standard deduction climbed, millions of middle income households no longer had a reason to itemize, which meant their donations stopped translating into tax savings. Among filers in the middle of the income distribution, the share claiming a charitable deduction fell from about 17% to 5.5%, a drop of roughly two thirds. The average subsidy those middle class donors received for every dollar given fell from 8.1% to just 3.3%. Compare that to the top 1% of earners, whose subsidy barely budged, slipping from 30.5% to 28.9%. That gap means wealthy donors now receive close to nine times the tax benefit that middle class donors get for the same generosity.

Earlier tax changes had already tilted incentives toward wealthier givers. The Pension Protection Act of 2006 created special provisions for retirees with large IRAs who donated to charity, and a 2012 law extended those breaks while expanding deductions available to high earners. The 2017 law simply accelerated a trend that was already underway, stripping away the incentive for the broad middle class while leaving the wealthy largely untouched.

Top Heavy Philanthropy and Where the Dollars Land

Individuals gave more than $392 billion in 2024, and corporate donations jumped over 9%, a record for companies. But those strong totals mask a shift experts describe as top heavy philanthropy: fewer households giving, with wealthy individuals, foundations, and corporations accounting for a growing share of the total.

Wealth brings tax strategies that ordinary donors rarely use. Investors who donate appreciated stock can sidestep capital gains taxes entirely while still deducting the asset's full market value. Retirees over 70 and a half can send money straight from an IRA to a charity through a qualified charitable distribution, lowering their taxable income in the process. Susan Hirshman, director of wealth management at Schwab Wealth Advisory, laid out the logic simply: selling a long held asset triggers capital gains tax, but gifting that same asset directly to a charity avoids the tax altogether while still allowing a deduction for its fair market value.

Even so, plenty of wealthy donors are leaving money on the table. Despite strong stock market gains in recent years, Schwab data shows 71% of high net worth investors still give by cash or check. Only 8% donate appreciated securities, and just 11% give retirement assets, meaning many affluent households are missing tax savings that are readily available to them.

Starting in 2026, the One Big Beautiful Bill Act will let every taxpayer deduct up to $1,000, or $2,000 for married couples, in charitable donations even without itemizing. It marks the first broad based tax break aimed at small donors since 2017 took that incentive away, though income limits and dollar caps mean the benefit will likely stay modest for most households.

Religious Giving Slows While Education and Advocacy Groups Surge

Religious organizations still pulled in the largest share of American generosity in 2024, collecting $146.5 billion, close to a quarter of all charitable dollars. But growth there was just 1.9%, which means giving to religious groups actually lost ground once inflation is factored in.

Other categories moved faster. Education charities grew 13.2% to $88.3 billion, international affairs organizations climbed 17.7%, and public society benefit groups, a category that includes community foundations and civil rights organizations, rose 19.5%.

Those shifts track closely with the priorities of wealthy donors, who now drive a larger share of total giving. Schwab data shows high net worth individuals favor human services (31%) and religion (30%), followed by local organizations and health causes, both at 27%. Politics factors in too: a third of wealthy donors cited the political landscape as a motivation for their giving, and 14% pointed to geopolitical issues.

What Happens as Giving Concentrates Further

The dollar totals keep climbing, but the base of everyday donors keeps thinning out. The 2017 tax changes explain much of that split, rewarding large, strategic gifts from wealthy households while quietly removing the incentive for smaller, routine donations from everyone else. Whether the 2026 deduction for non itemizers meaningfully draws middle class households back into giving, or simply offers a modest consolation prize, will say a lot about whether American philanthropy stays this top heavy or starts to broaden out again.