Advocacy & Public Policy

Independent Sector asks support for charitable deductions

From Diana Aviv, Independent Sector

During the next several weeks, there will be considerable activity in Washington, DC, on budget and tax matters that could ultimately have a significant effect on the future of the nonprofit and philanthropic sector. The charitable deduction may be at risk. We must seize this opportunity to make our voices heard in the current debate about the importance of the charitable deduction. 

> What’s Happening Right Now – Prompted by anticipated negotiations with Congress to raise the debt ceiling, President Obama recently announced his intention to create a new group composed of leaders from both parties and led by Vice President Biden to reach a “final agreement on a plan to reduce the deficit and get it done by the end of June.” Among the items that the President specifically addressed in his four-part proposal to reduce the deficit was spending on itemized deductions – “from home ownership to charitable giving.” As he has in his last three budget proposals, the President again called for capping charitable and other deductions for households with incomes over $250,000 per year. The discussions are set to begin on May 5. 

Adding to the urgency, a bipartisan group of Senators, the so-called “Gang of Six,” plans to introduce legislation in early May that embodies the deficit reduction proposals of the President’s Commission on Fiscal Responsibility and Reform, which issued its report last December. The commission, as you may recall, proposed eliminating the charitable deduction and replacing it with a 12 percent credit for charitable gifts that exceed 2 percent of an individual’s adjusted gross income. Very little is known about how this proposed change might affect charitable giving, and it would not be responsible to adopt this significant policy change until its effects are clearly understood.

> Why the Charitable Deduction is Important and Fair – While Americans give to charitable organizations for many reasons, studies have shown that tax policy greatly shapes the size and number of charitable donations. It has been estimated that, with no deduction for charitable gifts, annual giving would drop by between 25 and 36 percent, and the proposed cap could cost charities as much as $7 billion a year in contributions.

The charitable deduction is a way to enrich communities, not individual taxpayers. Unlike other tax deductions that subsidize personal expenditures, the charitable deduction provides an incentive for people to give money away to benefit others.

Independent Sector has created a one-pager on the charitable deduction that we encourage you to use in your conversations with Hill and Administration staff, as well as your own members, affiliates, and stakeholders.

> What You Can Do

  • Please contact the members of Congress with whom you have relationships and/or who represent your organization and the people you serve. Ask them to protect the charitable deduction as a fair and important incentive for charitable giving. Let them know that your organization depends on the charitable gifts that this tax incentive generates. Congress is currently completing its spring district work period, which may provide an opportunity to speak with your representatives while they are at home.
  • If you have relationships with any of the members of Congress who are involved in the current negotiations or the development of legislative proposals, it is especially important that you contact them now. Their names (linked to their contact pages) are listed below.

Members of Congress participating in the deficit reduction negotiations led by Vice President Biden: 

Senators now developing legislation to implement the Commission on Fiscal Responsibility and Reform:

Please feel free to be in touch with Lois Fu, IS vice president for public policy, (202) 467-6129, or Geoff Plague, IS director of government relations, (202) 467-6181, if you have questions or would like to discuss these issues. I hope you will join us in this effort.

Best regards, 

Diana Aviv
IS president and CEO