Banks often boast about their splashy commitments to charity. But with businesses poised to receive a hefty tax windfall, nonprofits will be applying extra pressure on big banks to step up their giving.

In a flurry of announcements following the recent passage of the Republican tax bill, some of the industry’s biggest names — Wells Fargo, PNC, SunTrust and others — have said they plan to boost their charitable contributions in 2018. Wells has pledged 2% of after-tax profits to charity starting in 2019; its most recent five-year average was 1.3%.

The moves get the banks ahead of an inevitable trend: Personal donations, by far the largest source of charitable funds, are expected to plunge in the years ahead because the new tax law eliminates incentives for many households to give. Nonprofits are expected to hit up big companies —and big banks in particular — to pick up the slack.

“Large banks and corporations just received a huge tax cut, and as a matter of moral conscience ought to be taking at least 2% of their profits and pouring it into local communities,” said Tim Delaney, CEO of the National Council of Nonprofits, which represents over 25,000 organizations.

The tax cut puts banks in an especially delicate spot, given that the industry is slated to receive a financial windfall when bad memories of the financial crisis are still fresh. Donating more to local charities is one way for the industry to demonstrate its commitment to social issues, Delaney said.

“There’s a lot of anger out there still, and there is an opportunity for banks and other corporations to do the right thing,” Delaney said.

Stephen Hahn-Griffiths, chief research officer at the Reputation Institute, agreed. The tax cut is a “double-edged sword” for the financial services industry, he said.

Making a public commitment to corporate citizenship is more important than ever for bank reputations, as the public watches the industry receive both tax breaks and a lighter touch from financial regulators. “For some members of the general public, it opens up old wounds,” Hahn-Griffiths said.

In its announcement, Wells committed to donating $400 million to nonprofits in 2018, which would be an increase of 40% from this year. The funding will be used for down-payment assistance for first-time homebuyers, as well as an initiative designed to increase access to capital for black business owners.

Charitable giving “has always been important for us,” said Mark Rizer, Wells’ head of community relations. He said the effort is “independent” of the company’s ongoing work to repair its corporate image, following the string of scandals in its retail bank.

PNC Financial Services Group in Pittsburgh, meanwhile, plans to donate $200 million to its corporate foundation, to support early childhood education in underserved communities. The company, which has $364 billion in assets, established its so-called Grow Up Great initiative in 2004.

SunTrust Banks in Atlanta announced on Thursday that it would give $50 million to financial advisory efforts, including its onUp financial literacy program and job training.

The announcements come as companies across the country are poised to reap the benefits of the permanent corporate tax cut signed into law last week.

The new tax law slashes the corporate tax rate to 21% from 35%. The reduction is expected to result in double-digit profit increases at big banks, including Wells and Bank of America, according to a report from Keefe, Bruyette & Woods.

Under current law, companies can deduct charitable contributions of up to 10% of their taxable income. The value of the deduction will decline, however, once corporate rates decline in 2018.

Corporate giving has increased steadily over the past few decades. However, measured as a percentage of pretax profits, it fell to 0.8% in 2015, below the 40-year average of 1.1%, according to the Chronicle of Philanthropy, citing data from Giving USA.

Perhaps most important for the nonprofit sector, the tax law overhauls the incentives for individual donations. It does so by doubling the standard deduction to $12,000 for individuals and $24,000 for joint filers. The increase means that fewer households will itemize their taxes in 2018 — and, by extension, that fewer households will have access to the charitable deduction.

In total, the changes for individuals are expected to reduce charitable giving by an estimated $13 billion per year, starting in 2018, according to an estimate of from the National Council of Nonprofits.

Individuals donated $264.6 billion in 2015, an increase of 4% from a year earlier, according to the Chronicle.

“It is going to have a detrimental effect on charitable giving overall,” said Aaron Dorfman, CEO of the National Committee for Responsive Philanthropy. “Corporate giving may go up, but most of the giving is done by individuals in this country.”

Within the banking industry, corporate giving has changed in several important ways since the crisis, Dorfman said. He noted that big banks, such as Citigroup, have begun to recognize the importance of making long-term grants to nonprofits — and allowing those organizations to use the funds in the best way they see fit.

“Bank-related foundations have recognized the importance of providing unrestricted general operating support,” Dorfman said. “In the nonprofit world, we have this perverse approach that every donor restricts their money for the things they like, and that inhibits effectiveness.”

Banks have also aligned their giving more closely with their business strategies, Dorfman said. The recent promotion of JPMorgan Chase’s corporate responsibility officer, Peter Scher, to the company’s operating committee is an example of that trend, he said.

Other big banks have focused their philanthropy on nonprofits that increase the financial profiles of potential customers, according to Dorfman.

Wells’ announcement last week is a good example: $75 million of its $400 million goal for 2018 will go to NeighborhoodLIFT, a program which is run by the NeighborWorks, a national affordable housing group.

Wells began funding LIFT in 2012, and has so far provided assistance primarily to first-time homeowners in 57 cities. It donates directly to NeighborWorks, which in turn makes down payments, ranging from $2,500 to $30,000, on behalf of first-time homebuyers.

“Homeownership is the single biggest wealth creator,” said Rizer, head of community relations at Wells, noting the damage caused by the mortgage crisis in low-income and minority communities. He declined to say how many LIFT beneficiaries ultimately choose Wells for their mortgages.

Additionally, Wells plans to devote $100 million to increasing access to capital for minority-owned businesses. Through a program known as Diverse Community Capital, which was established last year, the company will provide low-cost loans and grants to community development financial institutions to increase small-business lending in underserved areas.

Both initiatives provide Wells with credit toward compliance with the Community Reinvestment Act, according to Rizer.

In March the Office of the Comptroller of the Currency lowered Wells’ CRA rating to “Needs to Improve” from “Outstanding,” for the 2009-2012 exam period.

In the months ahead, as other banks make plans for corporate philanthropy, Delaney, CEO of the National Council on Nonprofits, encouraged the industry to keep smaller organizations in mind, such as domestic violence shelters and food banks. Those are the types of local organizations that are expected to take the biggest hit from the tax-law changes, he said.

“People really depend on nonprofits to assist them in their time of need,” Delaney said.

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Kristin Broughton

Kristin Broughton

Kristin Broughton is a reporter for American Banker, where she writes about the business of national and regional banking.