THE FISCAL CLIFF AND NONPROFITS: CHARITABLE GIVING INCENTIVE IN JEOPARDY


By James D’AmbrosioJamesProfile1Twitter

As negotiations continue in Washington about the fiscal cliff — automatic spending cuts (nearly $55 billion) and across-the-board tax increases scheduled to take effect January 2, 2013 if Congress can’t reach an agreement — a key item for nonprofits is the charitable giving incentive.

ITEMIZED DEDUCTIONS AT ISSUE

Currently federal tax law encourages charitable giving through itemized deductions. However, the National Council on Nonprofits, a resource and advocate for nonprofits, notes that bipartisan commissions, Senators, Representatives and the President have all proposed deficit reduction plans that include changing the charitable giving incentive in some way. The Council strongly opposes any change(s) negatively impacting agencies’ ability to serve communities. 

The Web site www.givevoice.org — a collaborative effort of U.S. nonprofits —urges agencies to TAKE ACTION. They report lawmakers are considering a proposal to cap all itemized deductions at specific levels — $15,000, $17,000 or $25,000 per individual. They cite a Nov. 18 Wall Street Journal article indicating the national average for all deductions is $26,000 — health care, mortgage interest, state/local taxes and charitable giving  — effectively eliminating any tax incentive for charitable donations. Ouch!

STATISTICS & INFORMATION

The National Council of Nonprofits reports these findings:

 ♦ 30 PERCENT OF AMERICANS indicated they would reduce giving if tax incentives were removed. 

OF THOSE 30 PERCENT, 62 percent said they would decrease giving by a “significant amount.” 

OVER 20 PERCENT OF YEARLY ONLINE GIVING takes place on December 30 and 31, clearly indicating donors consider tax consequences when making charitable donations.

♦ GIVING INCENTIVES SAVE GOVERNMENT MONEY. Since nonprofits employ 10 percent of American workers, every agency closing creates more unemployment and fewer people served. Moreover, nonprofit programs for children, seniors and people with disabilities help family members continue working full-time, resulting in less reliance on government programs. Peter Orszag, former director of the White House Office of Management and Budget, is quoted as saying: “The charitable sector… has the most to lose from a limitation on itemized deductions.” View detailed infographic.

NEW YORK COUNCIL WEIGHS IN

The New York Council of Nonprofits, a statewide association of nonprofits with 3,000+ members, notes that charities in high-tax states such as New York are at greater risk. They point out that charitable deductions benefit THE PUBLIC, not the INDIVIDUAL taxpayer, unlike deductions for mortgage interest, gambling losses, etc. (Visit www.nycon.org).   

PERSPECTIVE & OUTLOOK 

Clearly, nonprofits have much to lose from a cap on itemized deductions. It is imperative agencies closely monitor negotiations and do what they can to voice their opposition. Many agencies, still feeling the impacts of a deep recession and funding cuts, can’t afford another setback.

Even should an agreement be reached sparing the charitable giving incentive, the fact that it was in jeopardy is significant. Given our country’s long-term fiscal challenges, this issue could surface again. Nonprofits need to continually monitor political happenings and be ready to act. 

____________________________________________

QUESTIONS TO READERS

A) What is your perspective on this issue?

B) Is your agency involved in opposing a cap?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: