President Obama’s proposal to limit charitable tax deductions for wealthy people is roiling the nonprofit world.
from The NonProfit Times:
Charitable giving could take a hit under President Barack Obama’s new federal budget – or it might not, depending on to whom you talk – or argue.
Unveiled on Feb. 26, the president’s proposed Fiscal Year 2010 budget, if passed by Congress, would reduce the deductibility of charitable contributions from 35 percent to 28 percent on households that earn more than $250,000 annually. It also calls for a return of the 39.6 percent tax bracket, which could affect charitable giving.
Research suggests that a 10-percent increase in the after-tax cost of donations cuts giving by 4 to 8 percent, according to Roberton Williams, senior fellow at The Urban Institute’s Tax Policy Center in Washington, D.C.
from The Chronicle of Philanthropy:
“During the current economic downturn, which has forced nonprofits to do more with less, any proposal which would result in a decrease in private giving will be a disaster for America’s charities, and for those who depend upon them,” said United Jewish Communities, an umbrella group for Jewish social-service charities.
from The American Jewish Committee:
The American Jewish Committee is urging the Obama Administration to reconsider its proposal to cap the rate that high-income taxpayers can claim for charitable deductions.
“This proposal will have a devastating effect on nonprofits by removing a prime source of funding for our missions at a time when we are already grappling with severely reduced financial resources,” wrote AJC Executive Director David A. Harris in a letter to Peter R. Orszag, Director of the Office of Management and Budget.
“The Administration should not strike an ill-considered blow at private philanthropy that would undermine charities already buffeted by the economic crisis,” said Harris.
from The Wall Street Journal:
But let us consider the point of philanthropy in the first place – to allow those with much to help those with little.
from Charity Navigator:
The data that we have seen over the years has shown a big spike in donations through our site during the last several days of the year, especially on December 31st which of course is the last day to make a qualified tax deductible charitable contribution. This data indicates to us that the tax benefits really do motivate people to donate.
“My best guess is that this wouldn’t have a huge effect, but because of the economy it is going to have a worse effect,” said Eileen R. Heisman, president of the National Philanthropic Trust, in Philadelphia.
“It certainly is not going to make things better,” she said. “The question is how much worse it will be on top of worse. With the economy this bad, it does worry me that a new policy would be in place, giving wealthy people a disincentive to give.”