Tax Tidbit

Were you able to claim a charitable deduction when you filed your taxes?

Well, thank St. Katharine Drexel!

Uncle Sam has a bone to pick with St. Katharine Drexel! If you have filed your taxes hopefully it means that a refund is on its way to you. Did you know your refund likely got a little boost this year thanks to a new tax law? In addition to the standard deduction, under this new law, individuals could deduct an additional $300 for cash contributions made to qualified charities, while married individuals could deduct $600. Most Americans do not itemize, so this temporary change benefited millions of taxpayers. 

But what does this have to do with St. Katharine Drexel? Well in 1924, Mother Katharine and her influential family successfully lobbied Congress for the first charitable exemption- what later became known as the “Philadelphia nun provision.” Under the provision, anyone who had given 90% of their income to the charity for the previous 10 years was exempt from income taxes.

At the time, she was likely the only person who qualified for the provision because most people don’t give away 90% of their income. Yet, the impact of the measure was two-fold. It enabled all of her funds to be directed to the schools (like ours) and religious communities who needed them and it paved the way for the charitable deductions we still receive today. 

St. Katharine Drexel is known as the patron saint of philanthropy, a title that certainly fits. There is no official figure, but it is estimated that she donated over $20 million dollars in her lifetime. That would be equivalent to $500 million dollars today! Following St. Katharine Drexel’s example, Americans gave a record $471 billion to charities in 2020, according to Giving USA. 

And millions of Americans got to deduct their donations this year thanks in part to the lobbying efforts of Mother Drexel. Uncle Sam may not be her biggest fan, but taxpayers and charitable organizations should give St. Katharine a high-five!