Massachusetts’ 25 Year Referendum on the Charitable Contribution Deduction

I have always thought of the charitable contribution deduction as an automatic feature of any tax system, whether based on income or consumption.  The deduction is one of the first recognized in our federal system, probably even predating the ordinary and necessary business expense deduction.  Most countries, even developing nations, allow it and in the United States most states allow it.  I was surprised to learn, though, that Massachusetts has only ever allowed a charitable contribution briefly since 2000, and then only by popular referendum – something called an “indirect initiated state statute.”  After it was adopted in 2000, it was “suspended” just three years later. It was reinstated in 2023, apparently without limitation.  A quick check indicates that the average contribution in Massachusetts is a little more than $5000.    

So I am not quite sure why Massachusetts charities are even bothered by the Governor’s proposal to limit the newly reenacted charitable contribution to $5,000 ($10,000 for married couples). But I guess they would prefer an unlimited deduction in any event. Here is the Governor’s proposal:

In the case of a single person or a married person filing a separate return or as head of household, the total amount deducted for the taxable year shall not exceed $5,000. In the case of a married couple filing a joint return, the total amount deducted for the taxable year shall not exceed $10,000. All requirements, conditions and limitations applicable to charitable contributions under the Code shall apply for purposes of determining the amount of the deduction under this subparagraph, except that taxpayers shall not be required to itemize their deductions in their federal income tax returns.

It’s not like the charitable contribution deduction has ever been the lifeblood of Massachusetts civil society.  Still, taxpayers recommended it by a nearly 72% vote 25 years ago and that sounds like a delayed mandate to me.   And the concerns are especially valid in light of Presidents Trump and Musk’s effort to defund civil society nationwide:

Charitable donations are a very important funding source for nonprofits, and right now more than ever, we need charitable giving to go up, not down. So the governor’s proposal raises a lot of concerns,” said Jim Klocke, CEO of the Massachusetts Nonprofit Network. The sector’s concerns have been compounded by events at the federal level. Last week, President Donald Trump’s administration attempted to freeze federal funding, including grants to nonprofits. While the memo calling for the freeze was later rescinded, Trump aides said reducing federal spending remained a top goal. “We’re even more reliant on charitable giving as a sector now than we were a week ago,” Klocke said.

darryll k. jones