Nonprofits Oppose Obama’s Charity Deduction Cuts

| September 15, 2011

The President’s plan to cap tax breaks for charitable donations by wealthy donors is a concern for nonprofits who rely on those donations, and nonprofit organizations are opposing the move.

The proposed tax changes are a part of the American Jobs Act, and would apply to married couples with an adjusted gross income of at least $250,000. The changes would limit all write-offs based on itemized deductions to 28%, including charitable giving. The increased revenue to the government, estimated to be about $400 billion, would be used to pay for the proposed job bill. Ironic since the nonprofit sector has been the only job-growth niche for the past several years.

Nonprofits often deal with our most intractable problems and it’s just not profitable, in the traditional sense, to run a soup kitchen or shelter abused kids. Most nonprofits have few widgets to “sell”; their revenue streams rely heavily on donors. Nonprofits are sometimes the only advocates for at-risk populations like the poor or the aged, and recent cuts by hard pressed governments have already taken a toll.

In Tucson, some organizations have closed their doors. In others, the already low-paid staff have taken salary cuts and are working fewer hours although in many instances the workloads or the served populations have increased.

Charitable deductions amounted to 13% – or $158 billion – of all itemized deductions taken in 2009. It’s not clear how much that number would change based on placing a cap on the donations at the upper end, but it’s not much compared to other deductions or to the budget overall.

That is, it’s not much unless you are running a soup kitchen on a shoestring.

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Category: Charitable Giving, News & Advocacy

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