Changes to the tax code may restrict growth in philanthropy to U.S. higher education to less than 6 percent this year, according to a report this week from Moody’s Investors Service.
The anticipated slowdown in charitable giving highlights a change to the rating company’s donation forecast. In December, Moody’s predicted philanthropy growth through mid-2019 would mimic the 6 percent increase that colleges and universities saw in 2017.
Gifts to higher education reached a record $43.6 billion in 2017, a 6.3 percent increase from the year prior, driven by a 14.5 percent jump in donations from alumni, according to the Council for Aid to Education. But the individuals who boosted last year’s numbers are likely to be affected by the 2018 increase in the standard tax deduction, so they have less to gain in exchange for their donations. Major donors such as foundations are anticipated to give at comparable levels.
Giving trends are typically dictated by financial markets, economic conditions and consumer confidence, Moody’s wrote. Continued corrections and uncertainty in financial markets could also slow giving to colleges and universities this year, but if the economic stimulus proves more advantageous to individuals than anticipated, support to higher education may be stronger than expected.
Moody’s assigned a negative outlook to higher education in its December report, citing softening revenue against growing expenses.