The leaders of the Senate’s powerful Finance Committee aren’t offering much praise for President Obama’s plan to limit how much wealthy donors can deduct from their federal taxes for charitable gifts.

Sen. Charles Grassley of Iowa, the senior Republican member of the committee, said in a statement today that the plan would probably hurt the nonprofit world.

But Mr. Grassley, who has been an advocate for tightening tax regulations for nonprofit groups, stopped short of offering a clear prediction about what Mr. Obama’s plan might mean.

“Calculating the new deduction would be so complex that the impact on giving is difficult to determine, but given the economic crisis and the important role charities play in responding to the crisis, any proposal that might reduce charitable contributions seems counterproductive,” Mr. Grassley said.

Max Baucus, chairman of the committee,...

Groups that advocate for greater spending on international aid say they are pleased with President Obama’s budget proposal, which would increase by 9.5 percent, to $51.7-billion, the amount the U.S. government spends on foreign assistance.

“It is reassuring to see that the president understands how our investments abroad actually protect our families, jobs, and national security,” said Samuel A. Worthington, president of InterAction, an umbrella organization of international charities, in a statement. “Failing to adequately support our international development and humanitarian programs that work with the world’s poorest people to reduce global poverty and promote economic growth undermines our own national interest.”

Writing on the Center for Global Development’s blog, Sheila Herrling called the increase a “remarkable outcome given the state of the economy and the difficult...

About a dozen advocacy groups and Muslim charities told a federal court today that the government’s seizure of a charity’s assets because of allegations it assisted terrorists hurts humanitarian work and America’s efforts to fight terrorism.

The groups raised the concern in a friend-of-the-court brief filed in support of KindHearts for Charitable Humanitarian Development, a Toledo charity. In 2006, the Treasury Department froze the group’s assets because it was under investigation for supporting terrorists in the Middle East.

The charity has denied the charges and along with the American Civil Liberties Union and others, last year sued the government, saying the seizure of the financial assets was illegal.

An executive order signed by President Bush in 2001 allows the federal government to freeze the assets of charities, businesses, and individuals if they are being investigated...

White House officials say they doubt President Obama’s proposal to place new limits on tax breaks for charitable deductions would dampen giving.

“What drives charitable contributions is overall economic growth, is other motivations,” Peter Orszag, director of the Office of Management and Budget, told reporters, according to a transcript on the White House Web site. “It’s not done for a tax incentive, but rather out of benevolence or some other related desire.”

Furthermore, he said, the president’s plans to revive the sagging economy will “provide a strong boost” to both charities and their donors. He noted that the recent economic-stimulus package had provided money to strengthen charities.

Robert Gibbs, the White House press secretary, agreed that giving could be affected by the economic downturn, which “the president is keenly aware of and hoping to turn around quite quickly.”

The U.S. Government Accountability Office, the investigative arm of Congress, is looking into the “misreporting” of cash contributions to charity by individual taxpayers.

In a summary of the study’s parameters, the GAO said that data from the Internal Revenue Service show that “individual taxpayers frequently overstate deductions and make other errors when reporting cash contributions to charities.”

The agency is working to “identify pros and cons of potential options to improve compliance, including, if possible, their potential impact and costs and burdens on taxpayers, IRS, and third parties.”

The GAO was asked to review the matter by Sen. Max Baucus, the Montana Democrat who chairs the Senate Finance Committee, and Sen. Charles E. Grassley of Iowa, the senior Republican on the finance committee.

The GAO said it was asked to:

To carry out the study, the GAO said...

The U.S. Government Accountability Office has released a report that describes the ways federal funds are provided to tax-exempt organizations and attempts to quantify the amounts nonprofit organizations receive through various programs.

“Our analysis of data presently collected suggests that significant federal funds reached nonprofit organizations in 2006,” said the GAO, the investigative arm of Congress.

But the GAO cautioned: “Due to limitations and reliability concerns with tracking systems’ data, the data presently collected provide an incomplete, unreliable picture of the federal government’s funds reaching the nonprofit sector through various mechanisms.”

With that caution in mind, the GAO said the approximate federal dollars flowing to charities and other tax-exempt organizations in 2006 through reviewed federal programs were:

• $135-billion in fee-for-service payments...

The top executives at Independent Sector and the Council on Foundations are the latest voices in the chorus of advocates who say President Obama’s tax plan would hamper giving to nonprofit groups and foundations.

“We are opposed to proposals which will significantly depress incentives for charitable giving,” said Steve Gunderson, president and chief executive of the Council on Foundations, an organization that represents grant makers. “In these hard economic times, we need to make sure tax and regulatory policy encourage growth in philanthropy.”

Independent Sector, a coalition of major charities and foundations, said in a statement that the plan would encourage some donors to “cap their gifts.”

“This could be a problem for many struggling nonprofits vital to our communities that are already facing a very difficult fund raising environment,” the organization said.

United Jewish Communities, an umbrella group for Jewish social-service charities, criticized President Obama’s plan to cut the charitable-deduction rate, saying it would deter giving at a time when charities need it most.

“During the current economic downturn, which has forced nonprofits to do more with less, any proposal which would result in a decrease in private giving will be a disaster for America’s charities, and for those who depend upon them,” it said in a statement.

Suzanne Perry

The White House has yet to provide details on its new Office of Social Innovation, but next week the Aspen Institute, in Washington, is holding a meeting to discuss parts of the effort, which seeks to provide federal assistance to innovative nonprofit groups that are working on the country’s most pressing problems.

According to Jane Wales, a vice president at Aspen and director of its philanthropy and social innovation program, the White House asked her to hold a series of meetings during the next two years to develop advice on how the office should operate. The first meeting will be March 4 and will include a bipartisan group of philanthropists, business leaders, and government officials.

Ms. Wales, who is also president of the Global Philanthropy Forum and worked for the National Security Council during the Clinton administration, said the gatherings will focus on a “social...

President Barack Obama’s plan to decrease the amount of money wealthy taxpayers can deduct from their tax returns for charitable donations would be “another nail in the coffin” for nonprofit groups, according to one prominent observer.

Sheldon Steinbach, a lawyer in Washington who represents colleges and universities, said the proposal comes at a time when many nonprofit groups are already facing decreased resources. As a result, the plan could have drastic consequences for many groups.

“Any disincentive to charitable giving, especially in the current economic climate, will have an impact far beyond the black letter law,” Mr. Steinbach said. “It will have an exponentially negative impact.”

According to news reports, the president is calling for a cap on itemized tax deductions for Americans who earn more than $250,000 annually.

Such a move would reduce the value of tax...