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Category Archives: Charitable Deduction
January 1, 2013, 4:26 pm
Fiscal Cliff Deal Could Hurt Charitable Giving
Legislation the Congress passed Tuesday to avoid the fiscal cliff limits how much wealthy people can claim in deductions for charitable contributions and other spending when they itemize their tax returns.
The legislation raises the top tax rate to 39.6 percent on household incomes above $450,000 but maintains current rates for everyone else, or about 98 percent of all Americans. It also delays for two months the $110-billion in federal spending cuts scheduled for 2013.
Throughout December nonprofits have been lobbying Congress and President Obama not to impose limits on the tax savings wealthy donors get when they make charitable contributions.
The Senate-crafted plan enacts limits that charities have opposed. It reinstates a provision eliminated in 2010 that reduces itemized deductions by 3 percent of the amount that household income exceeds $300,000. Write-offs grow more…
December 21, 2012, 3:57 pm
Nonprofits Fight Obama Call to Curb Charitable Deduction
President Obama’s plan to allow donors to get tax savings of up to 35 percent on their charitable donations may look like an early Christmas gift to nonprofits that have been aggressively lobbying to protect the tax break from any limits. [Editor's note: the previous sentence and other phrases throughout this article have been revised to more precisely describe the Obama plan.]
But to many charity leaders, that proposal, part of the president’s overall $1.2-trillion budget plan presented to Republicans this week, appears to be the same lump of coal as the 28 percent limit he has supported for years.
While the president’s latest budget offer died on arrival in the Republican-controlled House, the sudden emergence of a third option for limiting the charitable deduction proved both promising and troubling to nonprofits.
“For the first time the president has changed his position,â…
December 18, 2012, 6:00 pm
Obama Plan Would Spare Charitable Deduction
Nonprofits seeking to protect charitable deductions may have won at least one victory: President Obama’s budget proposal given to Republicans on Monday appeared to single out the charitable deduction for a more-generous write-off by the wealthy than mortgage interest, state taxes, or other tax breaks.
Republicans rebuffed the president’s overall proposal on Tuesday in the continuing back-and-forth of “fiscal cliff” negotiations. But nonprofit leaders were abuzz with the prospect that their coordinated advocacy to protect the charitable deduction may be paying off.
President Obama has long favored lowering the maximum amount wealthy taxpayers can deduct from their taxes for charitable gifts, from the current 35 percent to 28 percent. That means a $1,000 gift would reap a $280 tax savings instead of $350.
But his proposal Monday called for a 35-percent rate cap for charitable…
December 11, 2012, 8:33 am
Independent Sector Defends Charitable Deduction
Politico, a newspaper widely circulated in Washington, published a two-page ad from Independent Sector on Monday that provided a straightforward message to Congress and President Obama: “Don’t push charities over the fiscal cliff.”
The ad, signed by 945 organizations, urges Congress and the president to “preserve the charitable deduction’s powerful incentive for giving” as they negotiate a deal to avert tax increases and spending cuts scheduled to begin January 2.
“Since 1917, our nation’s tax system has strongly encouraged Americans to give back to their communities, and the broad concept of charity on which the deduction is based has given rise to a diverse and pluralistic set of organizations all dedicated to the public good,” says the ad, which is an excerpt of a letter the nonprofits sent to Mr. Obama and House Speaker John Boehner.
The ad is part of a broader strategy to…
December 3, 2012, 9:25 am
Charities Would Lose $10-Billion Under Tax Cap, White House Says
President Obama won’ t support an annual limit on deductions, including those for charitable giving, as the White House issued an estimate that such a break would cost charities at least $10-billion a year.
That will come as a relief to nonprofit leaders who say such limits are essentially the same as ending charitable deductions.
Advocates of a cap have said that it could raise $1-trillion over 10 years, the same sum that would come from allowing Bush-era tax cuts to expire, as the Obama administration seeks. The Bush cuts mainly lowered the rates for wealthy people, so letting them expire would mainly hit America’s affluent.
The idea of an annual cap on deductions of $25,000 was proposed by Republican Mitt Romney during his failed bid for president. The idea has gained some traction during discussions to avert the massive spending cuts and tax increases scheduled to go…
November 13, 2012, 8:48 am
Charitable-Deduction Limit Would Hurt Poor, Say Nonprofit Leaders
Nonprofits need to alter their approach to protecting the charitable deduction, said nonprofit leaders from across the country gathered in San Francisco over the holiday weekend. Instead of talking about the effects on wealthy donors, they said they must demonstrate they are seeking to protect their services to the poor.
As the lame-duck Congress prepares to convene Tuesday, charity and foundation officials at Independent Sector’s annual meeting discussed the charitable deduction as well as the impact of federal spending cuts that Congress could approve to avert falling off the so-called fiscal cliff.
Lawmakers have discussed many ways to raise money, including capping the tax deduction that taxpayers get for gifts to charities and eliminating the tax deductions that homeowners get for mortgage payments.
Nonprofit leaders say that federal spending cuts of any size will decrease …
October 18, 2012, 3:09 pm
Council on Foundations Plans to Step Up Advocacy
In an e-mail last night to her group’s membership, Vikki Spruill, the new leader of the Council on Foundations, announced a campaign to convey the value of philanthropy to lawmakers.
She painted a picture of philanthropy under threat from politicians who are looking for new ways to increase revenue.
“Both President Obama and Governor Romney have put forth plans that will affect giving, and Congress is eyeing all tax deductions as potential revenue raisers,” she wrote. “This would be a grave mistake and would negatively affect significant numbers of Americans.”
Since joining the Council in July, Ms. Spruill said, she has assembled a team of “seasoned political strategists, communications tacticians, and tax-policy experts with deep ties to federal policy makers.” The campaign will focus on educating lawmakers at the local, state, and federal levels, she said, showing them how…
March 27, 2012, 5:08 pm
Quiet Time on Capitol Hill Offers Opportunity for Charities
Legislative decisions often get delayed in a presidential-election year, but that makes 2012 a good time to contact members of Congress and their aides, says Jerry McCoy, a Washington lawyer who advises charities.
“This is a quiet time, and members are less distracted,” says Mr. McCoy. He says that point was brought home to him by two Congressional staff members who last week held an informal, off-the-record gathering with Mr. McCoy and members of the Association of Small Foundations.
One piece of legislation they discussed was a measure to expand the deduction that partnerships and other privately held businesses can get for contributing supplies such as blankets or emergency-relief products. (For more details, see a background report he wrote.)
Andrew Schulz, vice president for government relations at the Council on Foundations, agrees that this year is an opportune time for …
February 7, 2012, 5:48 pm
Preserving Charity Tax Breaks Won’t Be Main Goal of Nonprofit Coalition
Independent Sector, a coalition of nonprofits and foundations that has waged a vigorous campaign against proposals to limit the charitable deduction for wealthy people, has now decided to devote more attention to other aspects of budget and tax policy that could harm poor people.
Critics have accused Independent Sector and other nonprofit advocates of spending a disproportionate amount of energy protecting the charitable tax break, given other critical issues facing the nation, especially those affecting vulnerable people.
Diana Aviv, the group’s chief executive, said Independent Sector’s board “sympathized with that point of view.” It adopted a series of “guiding principles” last week, saying it plans to promote policies to cut the nation’s deficit and overhaul the tax code that do not “exacerbate income inequality or increase poverty.”
The principles, which were sent to the or…
February 3, 2012, 10:48 am
‘Buffett Rule’ Tax Bill Would Preserve Charitable Deduction
Senate Democrats have introduced legislation to require the richest Americans to pay a minimum share of their income in taxes, but allow them to continue claiming a deduction for charitable giving.
The bill, introduced by Sen. Sheldon Whitehouse of Rhode Island, aims to put into effect the so-called “Buffett Rule” that was championed by President Obama in his State of the Union address.
It would require taxpayers with adjusted gross incomes of more than $2-million, including capital gains and dividends, to pay at least 30 percent in federal taxes. The minimum tax would be phased in for people earning more than $1-million but less than $2-million under a formula that is spelled out in the legislation.
Donors would be able to deduct their charitable gifts from their adjusted gross incomes to lower their tax bills, thus preserving a giving incentive that has been fiercely defended …
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