One part of comprehensive tax reform being proposed in Washington could greatly reduce charitable giving: an increase in the standard deduction. It would cause millions more taxpayers (in addition to the two-thirds of individual filers already doing so) to file a short-form return and not itemize deductions — and thus lose any tax incentive for donating to charity. The inevitable result would be substantial reductions in charitable contributions, spelling disastrous consequences for tax-exempt organizations, unless mitigated.

As motivation for taxpayers to continue to donate to charity, we advocate including the content of a previously introduced congressional bill, the “Interest for Others Act of 2017,” in the larger reform effort. Its inclusion would partially offset the damage to nonprofits caused by an increased standard deduction: Individuals could exclude from taxable income up to $50 of checking or savings account interest or money market dividends, per account, contributed to charity. This idea captures a new source of funds for charities — “dormant” interest and dividend income — and engages a new generation of givers, many of whom lack prior philanthropic habits.

The average U.S. banking customer currently earns about $6 a year in checking and savings account interest. Many also own money market mutual funds, which pay comparably small dividends. There are millions of such accounts, so the aggregate incremental charitable donations that the Interest for Others Act encourages can be very large: Just 10 percent of U.S. checking and savings account earned interest could equal $3 billion in new charitable donations per year. Donations in excess of actual earned interest and dividends are likely; the incremental donations could swell nonprofits’ income far beyond mere interest and dividends. For a practical implementation, see the social-giving platform found at

Today, financial institutions need not prepare and send Form 1099 statements of income for accounts earning less than $10. The Interest for Others Act would increase that exemption to $50, but only if customers are given the opportunity to donate earned amounts to charity. Fewer 1099s to process would be a benefit to financial institutions, especially to community banks and credit unions, and would encourage adoption of the Interest for Others online-giving method, increase total charitable contributions and reduce IRS administrative costs.

The Interest for Others Act can work independent of major tax reform. But in light of bipartisan determination to pass comprehensive reform, its incorporation in the larger measure is practical. The exclusion might well be increased from $50 to $100, or higher, which would boost contributions to nonprofits, motivate higher-income taxpayers to participate and further reduce IRS administrative costs.

Charitable organizations’ work will be even more essential if tax reform premised on lowering rates and shrinking the federal government becomes law. The consequent elimination of public services and support invites new tax incentives for charitable giving like the Interest for Others Act. Whether at $50 or a higher exclusion level, that approach encourages additional charitable giving and compensates partially for the damage caused by an increase in the standard deduction. More charitable giving would lessen the burdens of government by enabling the nonprofit sector to do more, which will be vitally important given tax reform’s likely outcome, a smaller federal government.


William Dolan is the founder, and co-chair with John James, of the Interest for Others Foundation. Both are Minnesota attorneys. James is a former state revenue commissioner for Minnesota. They assisted in drafting HR894, the Interest for Others Act of 2017.