Election Day 2024 saw a decisive victory for Donald Trump and slim Republican majorities in both the House and Senate, setting the stage for Republicans to advance their agenda in Washington. But what will the second Trump administration mean for philanthropy, and for conservative and libertarian givers in particular?
To find out what we might expect—and how best to prepare for what’s to come—DonorsTrust recently hosted a special-event webinar on the theme of “Taxes, Philanthropy, and Donor Intent in the Next Administration,” which also serves as the latest episode of Giving Ventures.
The webinar featured DonorsTrust’s Lawson Bader and Peter Lipsett, along with three distinguished guests: Stephen Moore, Christie Herrera, and Michael Whitty. Each brought expertise and years of experience to the conversation, giving listeners a well-rounded approach to the topic of the future of charitable giving in the upcoming administration.
Steve is an economist, Heritage Foundation scholar, and close advisor of President Trump. He is co-founder of Unleash Prosperity, which educates policymakers and the public about the policy foundations of economic growth, and had a hand in crafting the 2017 Tax Cuts and Jobs Act (or “Trump tax cuts”).
Christie Herrera is President and CEO of Philanthropy Roundtable, the leading philanthropic network for conservative donors. Her work gives her a close-up view to the myriad proposals in Congress and the IRS that would significantly alter philanthropic giving.
Michael Whitty is a seasoned expert in estate tax law and planning and partner at Smith Gambrell & Russell LLP in Chicago. His estate planning acumen informs a longer-term approach to charitable giving in light of possible changes coming in the next few years.
A New Tax Bill
In 2017, Congress passed the Tax Cuts and Jobs Act, making good on Donald Trump’s campaign promise to shepherd and sign a tax cut into law. The TCJA cut individual and corporate tax rates and raised the standard deduction, among other changes.
But that law is phasing out, with most provisions set to expire at the end of 2025. When Congress goes into session with Republican majorities in January, extending those tax cuts or otherwise reforming the tax code will be near the top of the agenda. Steve Moore, dialing in from Mar-a-Lago for the discussion, was an advisor during the drafting process of the TCJA and serves as a key economic advisor to Donald Trump.
From his meetings with the president-elect, Steve is confident that extending the Trump tax cuts is a first-100-days priority for the incoming president. On Steve’s reading, Trump has something of an economic mandate as he returns to office. Economic concerns, especially inflation, were top of mind for many Americans who cast their ballots for the president-elect in this election, Steve points out: “It really was the economy, stupid!”
Because Republican majorities in Congress are narrow, Steve expects the bill to include spending offsets for tax cut extensions in order to pass through the Senate with a simple majority through the reconciliation process. The aim will be to make the 2017 tax cuts permanent or at least extend them for a few years.
In Steve’s view it’s a “relative certainty” we’ll see a Republican-crafted tax cut bill that largely extends the TCJA by the end of 2025. Without such a bill, Steve warns, the death tax exemption will lower, hitting philanthropy and family-owned businesses particularly hard.
Looming Threats to Philanthropy
Christie Herrera notes that this election saw threats to philanthropy from both Democrats and Republicans, with both the Harris-Walz and Trump-Vance tickets giving cause for concern. But, Christie reminds us, donor privacy is a bipartisan issue and conservatives and progressives alike have an interest in seeing philanthropy thrive.
Steve’s prediction that Republicans will pass a revenue-neutral tax bill through reconciliation raises the possibility that Congress will target philanthropy to pay for tax cuts, perhaps taxing nonprofit endowments and other assets. Raising taxes on the charitable sector in order to relieve tax burdens elsewhere will have a negative effect on philanthropy, Christie warns.
One policy idea that’s gained traction in recent years is a Universal Charitable Deduction that would incentivize taxpayers who do not itemize their deductions to support charitable causes. But to offset the lost tax revenue, Christie points out, a Universal Charitable Deduction would likely have to come at the cost of tax raises which would undermine economic prosperity and harm philanthropy.
Additional threats to the charitable sector come from the IRS, which could place restrictions on donor-advised funds or change the public support test for 501(c)(3) nonprofits. The populist wing of the GOP might also rally around ideas like requiring family foundations to place non-family members on their boards or taxing large endowments of nonprofits like universities.
Still, despite these threats Christie feels optimistic about the opportunity afforded by reauthorization of the Tax Cuts and Jobs Act to extend tax cuts and grow the economy, giving donors more dollars to put toward philanthropic causes.
Considerations for Planned Giving
Recalling the end of 2012 when it seemed the estate tax exemption might be cut, Michael Whitty says he’s relieved by the outcome of the election. Had Democrats emerged victorious in the presidential contest this year and earned a majority in Congress, the expiration of the TCJA might have led to the enactment of various proposals endorsed by Kamala Harris.
These proposals would have “neutered” the estate planning toolkit and could have seen the death tax come down hard to pay for Democrats’ spending priorities. Thankfully, Michael says, Republican victories offer some assurance that advanced estate planning techniques remain safe for the time being.
Asked for his advice to lawmakers crafting the next tax bill, Michael emphasized the importance of retaining advanced techniques based on leverage, such as grantor retained annuity trusts, installment sales, and estate freezes.
To learn more, listen to the full episode using the player above or on Apple Podcasts, Spotify, or wherever you get your podcasts.
