Impact of Trump-era Tax Cuts on Higher Education Giving

Last Updated on March 26, 2024 by Robert C. Hoopes

Policy changes brought on by the Tax Cuts and Jobs Act signed into law by former President Donald Trump in 2017 have had a notable impact on individual donations to colleges and universities. According to data from the Council for Advancement and Support of Education’s Voluntary Support of Education Survey, individual donations declined by 4% from $44.3 billion to $42.6 billion over two years following the implementation of the tax reforms. Additionally, the number of individual donors also decreased by 7% after accounting for factors such as enrollment size and tuition.

The tax reforms, which increased the standard deduction, led to fewer taxpayers itemizing their tax returns and deducting charitable donations from their taxable income. As a result, the decline in donations and donors was more pronounced for private institutions compared to public ones. This trend may pose a significant challenge for small colleges, which rely heavily on individual donations to support their operations.

Despite these challenges, research is ongoing to examine how colleges and universities are adapting to the tax changes and whether their fundraising efforts are successful in persuading more individual donors to contribute, despite the loss of the charitable tax deduction. It is important to note that other factors such as economic trends and the performance of the stock market can also impact giving to higher education institutions.

Overall, the findings suggest that colleges and universities may need to rethink their fundraising strategies in light of the changing tax landscape. By understanding the implications of the tax reforms and adjusting their approaches to donor outreach, institutions can work towards mitigating the impact of declining individual donations on their financial stability and ability to fulfill their educational missions.