Nonprofits Fight To Keep Charitable Deductions

When Congress was discussing ways to decrease the nation's deficit this summer, one proposal that came out of the White House was to cap itemized deductions at 28 percent for individuals in the highest two tax rates.  This proposal was met with heavy resistance from nonprofit organizations, and the proposal was eventually excluded from the final bill that passed Congress.  The rejoicing by nonprofits didn't last long, however, as the proposal has re-emerged in President Obama's American Jobs Act.

The NonProfit Times posted an article yesterday about how 19 major nonprofits wrote a letter to the members of the so-called "Super Committee," the group tasked with finding ways to further reduce the deficit.  The letter urged the committee to protect charitable deduction from the proposed cap.  Nonprofits fear that any major changes would seriously impact giving.  Most studies confirm this, but an interesting tidbit from the article seems to indicate there is some doubt on that front:

The challenge as Denton [senior vice president, government relations and strategic partnerships for American Red Cross] sees it is the uncertainty about what effect a change to deductions would have on donations. “Any tinkering on this just alarms folks,” he said, adding that for every study that indicates a large impact on giving, there are others that say the opposite.

The proposed change could lead to the damaging results they predict, it could have no affect at all, or it could be somewhere in the middle.  Not knowing for sure what the actual affect might be is probably more unsettling than if there was 100 percent certainty.  This uncertainty, combined with concern about the long-term whittling away of the deduction, has spurred nonprofits to take action.

Stay tuned to The NonProfit Times for more updates on this topic.