CAPPING DEDUCTIONS WOULD HURT DONATIONS
There is definite irony to the recurring proposals to decrease incentives for charitable giving. Today, nonprofit organizations need private support more than ever as they operate under increasing demands for services resulting from a stagnant economy and government budget cuts.
The Maryland Philanthropy Network recently issued a public statement urging policymakers to support charitable giving by opposing legislation to cap the charitable deduction for federal taxpayers at 28 percent.
As a membership organization of private and community foundations, donor-advised funds, and corporations, Maryland Philanthropy Network’s mission is to maximize the impact of philanthropic giving on community life through a growing network of diverse, informed and effective grantmakers.
Fundamental to this work is promoting charitable giving to meet the need of local communities. We believe the charitable deduction is an important tool to encourage more giving.
Americans are the most generous donors in the world; they donated more than $290 billion to charitable and philanthropic entities last year. Most of those donations, which provided critical resources at a time of great need, were claimed as deductions by taxpayers who itemized on their returns — a group that in 2009 included more than 50 million filers.
In preparation for a Senate Finance Committee hearing this week, the Joint Committee on Taxation published "Present Law and Background Relating to the Federal Tax Treatment of Charitable Contributions,” which reported that "empirical studies generally support the proposition that taxpayers respond to tax incentives when making giving decisions.”
Analysis by the Center on Philanthropy at Indiana University found that a 28 percent cap would reduce charitable giving by $4 billion to $9 billion.
A cherished tradition
For nearly a century, since the Revenue Act of 1917 created the charitable income tax deduction, our nation’s tax system has strongly encouraged Americans to give back to their communities by providing deductions for contributions to charitable organizations.
Limiting the value of the charitable deduction would do the exact opposite and fundamentally change a tax structure that has contributed to a cherished tradition of charitable giving that is unmatched in the world.
We join with the Council on Foundations and Independent Sector, the largest representative of private foundations and nonprofits, in urging Congress to reject proposals to limit the value of itemized deductions for charitable donations.
As nonprofit organizations struggle to meet increased demand for services and raise the necessary funds to meet those needs, we should encourage all individuals, regardless of income and wealth, to give more to charitable organizations.
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