NEW YORK – One idea in a 50-page list of cost-cutting proposals that Republican lawmakers are circulating as they mull budget reconciliation legislation is to "eliminate" tax deductions for contributions to nonprofit healthcare organizations.
The list, being circulated by the House Budget Committee, contains numerous proposals for lowering spending as Republicans look to renew tax cuts slated to expire at the end of 2025 and fund other promises that President Donald Trump made during his campaign. The proposal to nix healthcare charity tax deductions, which according to the document would save $83 billion over a decade, has particularly alarmed many patient advocacy groups.
Details are sparse, and it's unclear how legislators calculated the potential savings for the proposals in the document. An email requesting comment from Rep. Jodey Arrington, R-Texas, chair of the House Budget Committee and a member of the House Ways and Means Committee responsible for tax legislation, was not answered at press time.
The proposal comes at a time when fewer individuals are making charitable donations. According to the Indiana University Lilly Family School of Philanthropy, which conducts research on charitable giving trends in the US, Americans gave $557.16 billion to charities in 2023, a 1.9 increase in current dollars but a 2.1 percent dip when adjusted for inflation compared to 2022. Healthcare nonprofits received $56.58 billion in charitable contributions, around a 9 percent increase in current dollars and a 4 percent increase in inflation-adjusted dollars over the same period. Although donations are up compared to before the COVID-19 pandemic, the report also shows that the proportion of individuals giving is declining, from 82 percent in 1983 to 67 percent in 2023, while giving by foundations is increasing.
These trends have placed a spotlight on the tax policies supported by the Trump administration and Republican legislators, which can influence charitable giving to nonprofits that provide numerous vital services and accounted for 12.8 million jobs in 2022, two out of three of which were in healthcare and social assistance.
Many patient advocates are particularly worried about the proposal to eliminate tax deductions for giving to healthcare nonprofits since these groups rely so heavily on donations from individuals, corporations, and foundations for the services they provide. If enacted within budget reconciliation legislation, the proposal would take away tax-based incentives to donate to healthcare nonprofits across the board, from universities and hospitals that attract hefty endowments to "kitchen table" patient advocacy groups run by one or two individuals, said Marcia Horn, president and CEO of the International Cancer Advocacy Network (ICAN). "The nonprofit sector is one of America's great glories and is responsible for so much of the progress we have made in healthcare, education, and many other fields," Horn said, calling the proposal a "dagger in the heart of all patient advocacy nonprofits," including ICAN.
Others in the patient advocacy community are waiting for more information on these proposed cuts and remain optimistic that the patients and families that support them will continue to do so regardless of how tax policies shake out. Janet Freeman-Daily, cofounder and president of The ROS1ders, a nonprofit that supports patients with cancer driven by ROS1 gene alterations, noted that those who donate to groups like hers and other cancer nonprofits know or knew someone living with that type of cancer. "They choose to donate due to some combination of wanting to honor or recognize their friend or loved one, ease the burden of people living with that cancer, or find better treatments," she said. "Those motivations are not affected by the tax code."
'Utter madness'
Horn agrees that "many donors would no doubt continue to contribute" in support of ICAN's mission to help late-stage cancer patients. But the proposal to eliminate deductions for donations, she believes, "is bound to have a negative impact on ICAN and all other nonprofits, simply because everyone would have less money to donate without the deduction for charitable giving."
ICAN has been around for nearly 30 years and provides free support services to late-stage cancer patients, including making sure they're getting tested to identify the genetic abnormalities driving their tumor, understanding their test report, and finding treatment options and clinical trial opportunities based on the results. A significant proportion of ICAN's $1.5 million budget comes from donations from patients and their friends and families, but also contributions from corporations and foundations.
Over the past decade, alongside a burgeoning precision medicine and genetic testing industry, a patient community has formed to advocate for more research and better access to these cutting-edge options. For example, in lung cancer alone there are more than a dozen different groups for patients whose tumors are driven by specific genetic mutations.
Brothers Kevin and Robert Hanlon formed the Exon 20 Group in 2017 to increase awareness that available targeted treatments didn't work for the 2 percent of non-small cell lung cancers with EGFR exon 20 insertions and to raise research funds. Kevin Hanlon passed away in 2019, but when he was initially diagnosed with stage IV lung cancer, he didn't know which way to turn, recalled Robert Hanlon, who is a senior lecturer in the chemical engineering department at the Massachusetts Institute of Technology. ICAN was instrumental in helping the Hanlons understand the science and navigate treatment options, and the brothers worked with ICAN to create the Exon 20 Group, which raised $360,000 for research during the 2024-2025 cycle.
Robert Hanlon believes that wouldn't have been possible without tax-deductible charitable donations. "We know how to keep investigators' feet to the fire and get actionable results when we issue grants, so to have [legislators] even consider pulling the rug out from under effective biomarker patient advocacy groups such as the Exon 20 Group is utter madness."
ICAN is also involved in the Biomarker Collaborative, an online community of biomarker-focused patient advocacy groups, some of which are essentially two-person organizations. If legislators take away the ability to claim tax deductions for supporting healthcare charities, Horn worries about what will become of these really small nonprofits run by cancer survivors and their families who have "devoted the remainder of their working lives to cancer advocacy" and are entirely dependent on charitable donations. "All of these smaller groups do stellar work helping rare cancer patients who have no place to turn," she said. "The indispensable role these specific biomarker and patient support groups play would not be filled by anyone else if the charitable deduction disappeared."
Indeed, there was no push to find a cure for Usher syndrome, a rare genetic condition that causes deafness and blindness, when Melissa Chaikof founded the Usher 1F Collaborative with her husband in 2013. The Chaikofs have two children with Usher syndrome type 1F, caused by mutations in the PCDH15 gene. Over the years, the nonprofit has poured more than $5.3 million into the research for a cure, which scientists in turn have leveraged to raise an additional $9.2 million in grants. The organization is now funding three gene therapies for the 1F subtype of the disease at various academic labs, and the most advanced is in preclinical testing.
Last year, more than 80 percent of the nearly $828,000 budget of the collaborative came from individuals and corporate donors, fundraising events, and in-kind contributions, all for which the organization issued tax receipts. The group receives significant contributions and sponsorships from corporations, which Chaikof said would be particularly at risk if they could no longer claim a deduction.
"Stripping us of our ability to issue tax receipts would be tantamount to rescinding our 501(c) (3) [nonprofit] status, making it very difficult for us to convince donors to give when they could donate the same amount elsewhere and receive a tax receipt," Chaikof said. "Why punish those of us who are already facing such a difficult task and the hardship that comes from having, or our loved ones having, a rare disease, all of which are quality-of-life altering and many of which are fatal?"
This legislative proposal, alongside the Trump administration's recent pause on National Institutes of Health grant reviews and ban on funding diversity, equity, and inclusion programs, has suddenly put Genetic Alliance's entire $2 million budget in jeopardy. The nonprofit has worked with patients, families, and communities to accelerate genomic research since 1986 and relies on donations and government grants in equal measure.
Nonprofits like Genetic Alliance "already operate under immense financial strain, expected to provide high-quality services on shoestring budgets. Our staff, driven by mission rather than money, are paid too little," Genetic Alliance President and CEO Sharon Terry said. "We are forced to make impossible choices, stretching every dollar to its breaking point."
The consequences of a law eliminating tax incentives for donating to healthcare nonprofits will be "devastating," she said, and ultimately end up hindering life-saving research and hurting patients. "Stripping tax incentives for donations would accelerate this crisis, dismantling the infrastructure that allows nonprofits to bridge the gap between discovery and care," she said. "The people who need us most, those with rare and life-threatening diseases, would pay the ultimate price."
Motivations for giving
At the moment, little is known about how much backing this proposal has among legislators and its chances of ending up in budget reconciliation legislation. Groups like the Usher 1F Collaborative and Genetic Alliance are urging nonprofits to write to their state representatives and senators. ICAN's Horn said her group will alert supporters and cancer patients around the country to try to raise awareness of this proposal and squelch it in committee. She pointed out that there is bipartisan support for cancer research, and most of the members of the House Ways and Means Committee have a comprehensive cancer center in their state, which rely on advocacy groups to refer patients to their facilities for treatment and trials. "This is an absolutely appalling proposal that should be quickly buried and never see the light of day," Horn said.
The ROS1ders' Freeman-Daily, on the other hand, believes it's too early to tell what impact forthcoming tax policies will have on charitable giving. She pointed out that policies enacted through the Tax Cuts and Jobs Act (TCJA) of 2017 during Trump's first term are slated to expire by year-end and new tax strategies are still taking shape.
Taxpayers can either lower their taxable income by itemizing their charitable donations or take a standard deduction and reduce taxable income by a flat dollar amount. The TCJA doubled the standard deduction for taxpayers and increased the limit on deductions for charitable contributions from 50 percent to 60 percent of adjusted gross income (AGI). Groups tracking philanthropy trends say these policies have reduced itemized charitable giving among American households. Research by the University of Notre Dame and Indiana University found that in 2018, the first year after the TCJA's enactment, charitable giving dropped by $20 billion.
According to conservative think tank American Enterprise Institute, an average of 30 percent of filers itemized deductions during the eight years before the TCJA's enactment, but only 7.5 percent did so in the four years after it became law. From 2010 to 2017, total itemized giving averaged 2.2 percent of AGI each year, but the annual average fell to 1.7 percent from 2018 to 2021. "In other words, if the percentage of AGI had not declined, some $252 billion in itemized charitable contributions would have been made over the period 2018-21," according to AEI, which further estimated that the biggest decline in itemized giving relative to AGI was from households with incomes under $500,000.
In a recent letter to the House Way and Means Committee, the Charitable Giving Coalition noted that these data show that "fewer Americans now have access to the charitable deduction than at any time in its history" and urged legislators to make permanent a charitable deduction for non-itemizers that was available during the COVID-19 pandemic years to encourage charitable giving and was effective in doing so, particularly among lower-income filers.
Freeman-Daily couldn't comment on the impact the TCJA has had on donations to The ROS1ders, since it only incorporated as a nonprofit in 2019. The organization's budget, which was $186,000 in 2023, comes from donations and grants, which it uses to develop ROS1-positive cancer cell lines, fund research to advance treatments that target these alterations, and support educational activities.
However, Freeman-Daily said she has heard from other lung cancer nonprofits that the TCJA "didn't noticeably reduce their income from contributions" since most people donate to cancer patient advocacy groups like hers because they have ROS1-altered cancer or know someone who does. "I suspect any impending changes regarding tax breaks for charitable donations to health nonprofits will not significantly impact the biomarker patient groups," she said.
On the other hand, Chaikof said that Usher 1F Collaborative's ability to issue tax receipts is critical to its ability to fundraise, particularly from corporations and other sponsors who "definitely want the deduction." Family members of patients may continue to give, but Chaikof pointed out that the collaborative received $170,000 in donations during a fundraising push at the end of last year, receiving $5,000 on Dec. 31 alone. This year-end giving ensures deductions before the tax year ends and shows that donors do care about tax incentives, she noted.
"Philanthropy is not just generosity; it is survival," said Genetic Alliance's Terry. "And if Congress closes this door, countless others will close behind it."