"Charities
and the public need to understand that in the
current economic environment, which is creating difficulty
for some nonprofits and their constituents already, this
public policy change is likely to have an additional
negative effect," said Patrick M. Rooney, the philanthropy
center's interim executive director.
Under Obama's proposal, the tax deduction for those with
incomes over $250,000 -- which is now 35 cents for each
dollar donated -- would be limited to 28 percent. That would
return the rate to where it was during President Ronald
Reagan's administration.
Obama said the change would help equalize the tax break for
those donating to charity. "When I give $100, I'd get the
same amount of deduction as when some -- a bus driver who's
making $50,000 a year, or $40,000 a year -- give that same
$100," he said, adding that the provision would affect about
1 percent of Americans.
Administration officials said the proposal should be
considered within the totality of the budget. The policy
change would help finance efforts to reform the nation's
health-care system, said Kenneth Baer, a spokesman for
budget director Peter Orszag.
"Generally what keeps people giving is economic growth,
increasing incomes and increasing prosperity, and in
totality that's what this budget would do," Baer said. "This
change is going to fund health-care reform, and constraining
those costs is the single biggest thing we can do to put our
country on a sustainable fiscal path and get this country
going."
Americans donate about $300 billion a year to nonprofit
organizations, according to Giving USA, which conducts
annual surveys. But in the current economic climate, many
agencies are experiencing a drop in revenue. Many
foundations are giving less grant money to nonprofits
because their endowments have declined along with the stock
market, while local and state governments have also cut back
their funding.
Diana Aviv, president of Independent Sector, a national
coalition of charities, said any decrease in charitable
giving caused by Obama's proposal, no matter how small,
would be "seen as a stake in the heart."
"With all other means of income down, the idea that there
will be another potential cut to the income of those
nonprofit organizations feels catastrophic," Aviv said. "It
is utterly unacceptable."
In Congress, members of both parties have spoken out against
Obama's proposal since it was introduced last month. House
Majority Leader Steny H. Hoyer (D-Md.), in an interview on
MSNBC, said: "That's going to be controversial. And,
obviously, charitable institutions will be -- have great
concern. Clearly, one of their greatest concerns will be
very, very large-income donors who make very substantial
contributions to very worthwhile enterprises."
House Minority Leader John A. Boehner (R-Ohio) said in a
statement yesterday that limiting charitable tax deductions
to 28 percent "is absolutely the wrong thing to do. The
administration should reverse course on this reckless policy
that will hurt too many universities, churches and other
charitable organizations."
In a move to create a new incentive for charitable giving,
Democratic Sens. Charles E. Schumer (N.Y.), Carl M. Levin
(Mich.) and Debbie Stabenow (Mich.) said yesterday that they
have introduced legislation that would simplify the tax code
to spur private foundations to give more money to charities.
The bill would replace the current two-tiered system for
taxing foundations on their investment income with a single
tax rate, in part because lawmakers say the current system
punishes foundations for years in which they give away more
than usual.
Nonprofits such as universities and arts institutions that
rely heavily on large donations from wealthy individuals are
more likely to be affected by the administration's proposal
than are food banks, shelters and other social service
groups that raise money in smaller amounts.
Dean A. Zerbe, managing director of Alliant Group and a
former senior tax counsel to the Senate Finance Committee
who closely tracks the nonprofit sector, said he has no
doubt that Obama's proposal would change wealthy donors'
behavior.
"Of course it's going to affect behavior," he said. "The
charities recognize that. Everyone does. . . . People just
don't have their feet on their ground if they're not
recognizing that reality."
Still, Obama argued that the deduction is not the primary
reason people donate to charities and that his proposal
would not deter giving.
"Now, if it's really a charitable contribution, I'm assuming
that that shouldn't be a determining factor as to whether
you're giving that $100 to the homeless shelter down the
street," he said.
|