Discussions at the U.S. Treasury Department have recently turned to charitable deductions as a way to decrease the national deficit. Read the following update from The Center for Nonprofits at Foundation For The Carolinas to find out how you can take action against it.
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Background On Budget Negotiations:
As you may be aware, August 2 is the date the U.S. Treasury Department estimates the U.S. will exceed its borrowing authority, and negotiations continue between Democrats and Republicans on how to best stop the growing deficit. All programs are currently on the table, including the current charitable deduction (a $40 billion tax subsidy). Discussions by key Senators and House members have gone “public” in the direction of tweaks to the deduction, although it is not certain whether any change will be made to the deduction as a result of the current talks, or in future tax reform discussions in 2013 instead.
Why This Matters To Nonprofits:
Perhaps most notably, the Congressional Budget Office (CBO) was asked by the Chairman of the House Committee on the Budget to analyze and evaluate options for changing the tax treatment of the charitable deduction – a major step. In his preface to the report Douglas Elmendorf, director of the CBO, states, “The deductibility of charitable donations has been a feature of the U.S. individual income tax almost as long as the modern income tax has been in existence. Notwithstanding the long duration of that deduction, concerns about its cost, equity and efficiency have prompted many proposals to change the tax treatment of charitable contributions.”
Of particular interest to the nonprofit sector, 9 of 11 options that the CBO presented and analyzed reduce the federal tax subsidy, and most of those also are estimated to decrease total contributions to nonprofits. You can review the report, Options for Changing the Tax Treatment for Charitable Contributions, here. The Independent Sector issued a review of the report, Overview of May 2011 CBO Report, which you can see here.
What You Can Do Now:
Sources in Washington say whatever we as nonprofits do now will likely (and unfortunately) have no impact on the debt ceiling deal. However, their sense is that the bigger issue we are preparing for is tax reform discussions in 2013, although it wouldn’t surprise some if the charitable deduction gets included this round of negotiations. The lead up to tax reform is important, and our positioning now – including economic studies demonstrating the value of charitable giving, growing the coalition, identifying champions – is critical to that effort.
In a recent online post the Partnership for Philanthropic Planning (PPP) stated, “The federal government must continue to support philanthropy. Tax incentives for charitable giving, such as the charitable deduction, send an essential message about the value our society places on voluntary giving and the important role of charitable organizations in meeting critical individual and community needs.” You can find additional information as well as contact information for congressional representatives at the PPP Charitable Deduction Resources page.
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If you are associated with any of the following organizations, there are also opportunities to contact congressional representatives through the links below.
The Center for Association Leadership, Tell Congress to Preserve the Charitable Deduction
The United Way, Urge Congress to Protect Charitable Giving Incentive
Independent Sector, Take Action – The Charitable Deduction
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You can also find additional information about the charitable deduction discussions at the following links:
Charlotte Observer: Bobbi Hapgood, Executive Director, N.C. Network of Grantmakers and Holly Welch Stubbing, SVP Client Services & Legislative Affairs, Foundation For The Carolinas, Charitable Tax Deduction Fuels Nonprofits, Boosts Economy
Congressional Budget Office, Options for Changing the Tax Treatment for Charitable Contributions
Independent Sector one-page report, Preserve the Deduction for Charitable Giving
Independent Sector, Overview of May 2011 CBO Report “Options for Changing the Tax Treatment of Charitable Giving
Partnership for Philanthropic Planning, Charitable Deduction Resource Center