Independent Sector and eight of the 600 nonprofits it represents sent a letter on Tuesday to Rep. Darrell Issa requesting his support for the discount rate when he reintroduces legislation for a massive overhaul of the United States Postal Service this year. Mr. Issa committed last year to removing a provision to eliminate the discount that was included in the USPS overhaul bill that Congress ultimately never took up before the end of 2012.

That irked Anthony Conway, executive director of the Alliance of Nonprofit Mailers, who was frustrated that his 300-member organization was not consulted about sending the letter. He said he was concerned the action could backfire because it might irritate the powerful congressman.

“We’re baffled why some nonprofit groups have organized a public letter-writing campaign ostensibly to persuade Congressman Issa not to phase out nonprofit rates,” Mr. Conway said in a statement. “There was a provision in the original version of the House Republican postal reform bill last year that would have phased out nonprofit postal rates, but Congressman Issa deleted that provision in June 2012 after the Alliance and its allies raised the issue.”

Mr. Issa has not expressed any change in that position, but Independent Sector wanted to make sure the bill is not reintroduced this year with the same language calling for the discount’s elimination.

Independent Sector’s vice president for public policy, Geoffrey Plague, said it is typical for Congress to recycle proposed legislation that did not pass rather than to rewrite an entire bill. Mr. Plague said it made sense to make the request because the discount was last discussed six months ago, the postal service continues to lose money, and the federal government still needs to find significant revenue for deficit reduction.  The discount cost the postal service about $1.3-billion in 2011.

“It’s a minor provision in a major piece of legislation,” Mr. Plague said. “It didn’t feel right to assume they would remember it. Until legislation is passed that does not have this provision in it, it remains a live issue for the sector.”

He said Mr. Issa’s staff has agreed to meet on Monday with representatives from Independent Sector and from some of the eight groups that signed the letter.

Mr. Plague said the provision was never formally removed from the legislation and that it is much easier to stop something from being included in a new bill than it is to remove it.  Independent Sector’s letter thanked Mr. Issa for his support of the discount and it was sent, Mr. Plague said, “to send a friendly reminder of where the discussion had ended at the end of the last Congress.”

Mr. Conway sees another motive: credit. Independent Sector’s Web site already highlights that it sent the letter to Mr. Issa. Now, Mr. Conway said, if a new bill to overhaul the postal service emerges in 2013 without a provision to eliminate the discount, Independent Sector will try to claim credit.

“The commitment is still there” from Mr. Issa, Mr. Conway said. “Don’t draw attention to an issue that doesn’t exist.”

He said in an interview that the letter from Independent Sector—and signed by American Heart Association, American Cancer Society, American Red Cross, and five others groups—could be interpreted as questioning Mr. Issa’s commitment to preserving the discount. Mr. Issa, a California Republican, is chairman of the House Committee on Oversight and Government Reform.

“It’s government 101 that if a member has made a commitment to do something, to challenge him and to suggest he might renege on that commitment is a huge offense to a member,” Mr. Conway said. “You don’t do that kind of thing.”

Neal Denton, who was the executive director of the Alliance of Nonprofit Mailers from 1986 to 2006, said the letter was appropriate at the start of a new Congress.

“I think at the beginning of a new congressional session no one should take anything for granted,” said Mr. Denton, now senior vice president for government relations at YMCA of the USA, which signed the letter sent to Mr. Issa. “We should all make sure we’re doubling back and talking to our old friends and our new friends up on Capitol Hill.”

Mr. Conway said a public letter only belabors the obvious.

“We’re quite confident that the provision is dead,” Mr. Conway’s statement said. “The Alliance and its allies spent a lot of time on the Hill communicating with Congressman Issa and other key House members about the issue. Congressman Issa got it. He told us that the provision would be taken out. And he kept his word and took it out. There’s been no movement to reintroduce the provision. Publicly attacking it now is beating a dead horse.”

The Postal Reform Act of 2011 had proposed eliminating the nonprofit discount, which cost the postal service about $1.3-billion in 2011.  The provision was removed last year during Congressional negotiations, but the comprehensive postal bill died. It is expected to be considered again this year by the new Congress.

Independent Sector’s letter to Rep. Darrell Issa, chairman of the Committee on Oversight and Government Reform, aims to make sure new legislation picks up where last year’s measure left off and keeps the discount in place. Mr. Issa was a key player in removing the threat to the discount.

“We have no reason to believe that [Mr. Issa] has changed his position,” said Geoffrey Plague, vice president for public policy at Independent Sector. “We wanted to send a friendly reminder of where the discussion had ended at the end of the last Congress.”

Mr. Issa’s spokesman said no schedule had been set on what steps Congress would take this year on postal issues.

“There’s no threat at this point that I’m aware of,” said Mr. Conway.

Nonetheless, Mr. Plague said, nonprofits would rather begin the debate in 2013 with a bill that preserves the discount from the start. Removing a proposal from legislation is a difficult political process and one nonprofits already successfully waged last year.

“Getting something out is infinitely harder than keeping something in,” Mr. Plague said.

The announcement was made today by Rep. Dave Camp of Michigan, chairman of the Ways and Means Committee, which oversees tax-exempt organizations.

Mr. Boustany was re-elected to Congress after winning a runoff election last month that was required by state law because no candidate had won a majority of votes in the November contest.

He held a hearing in July on charities with complicated operations like a profit-generating arm and in May on issues including oversight of universities and hospitals.

Mr. Boustany told The Chronicle last year he was concerned that the IRS had not been aggressive enough in monitoring charity abuses.

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But Mr. Jealous says his organization has decided to make young people a priority, in part by asking them what they are most passionate about changing in the world and showing them how they can channel frustration about what’s wrong into positive action.

“Listen to them first, find out what they are really angry about, and then say, ‘This is how we turn it outward, and we actually overcome that issue,’” Mr. Jealous says.

In this video, Mr. Jealous talks about how his organization has mobilized young people to protest criminal-justice policies that focus on putting people in prison and explains how other groups can borrow techniques that have helped the NAACP increase its number of young members.

The boost will come mainly from the decision to increase the top tax bracket from 35 percent to 39.6 percent on income above $400,000 for individuals ($450,000 for married couples), the institute said.

Because the charitable deduction is tied to a person’s tax bracket, those donors will now save $39.60 in taxes for every $100 they give to charity. In other words, their gift will cost them only $60.40, down from $65 under the 35-percent rate.

People in the top 1 percent of income distribution will provide almost all of the higher giving, increasing their donations by an estimated 6.2 percent, the analysis found.

The study also took into account the decision to raise the capital-gains tax from 15 percent to 20 percent. That provides an additional incentive for people to donate stock or other property that has risen sharply in value. Not only will they escape the higher capital-gains tax, they will also get the bigger 39.6-percent tax savings on their gift.

The new so-called Pease limitation—which cuts itemized deductions by a complicated formula that in effect imposes a surtax on high earners—will have “negligible effects” on charitable giving, the analysis concluded.

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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 limited the more taxable income a person has and could reduce the value of deductions by up to 80 percent for the highest-income taxpayers, according to the Tax Policy Center.

The 2010 limits have long been opposed by charities. Independent Sector noted that the limit could reduce giving in its February analysis of the idea, which was included in President Obama’s 2013 budget proposal.

The organization, which represents about 600 nonprofits, also signed a letter this summer from the Charitable Giving Coalition to Sen. Harry Reid, the Senate majority leader, stating its opposition to the deduction limits.

The letter, signed by nearly a 30 of the nation’s largest nonprofit organizations, said the limits would “result in fewer contributions flowing to America’s charities, which are now being asked to provide even more services to the most vulnerable among us.”

The legislation also called for a serious overhaul of the tax code. That means charities could spend much of 2013 fending off tax changes they fear would deter giving. President Obama has long supported imposing a 28-percent limit on the value of itemized deductions taken by the wealthiest taxpayers, including those for charitable giving.

“Cutting spending has to go hand in hand with further reforms to our tax code so that the wealthiest corporations and individuals can’t take advantage of loopholes and deductions that aren’t available to most Americans,” President Obama said in a press conference near midnight Tuesday.

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,” said Diana Aviv, chief executive of Independent Sector, a coalition of some 600 nonprofits. “There is a reason to be hopeful that there is flexibility in a position where there hasn’t been before.”

But the 35 percent limit, like the 28 percent cap, is not the result Independent Sector and other associations have been demanding.

They want the deduction’s maximum value to remain tied to the top income-tax rate, which is set to increase to 39.6 percent for the wealthiest taxpayers once Bush-era tax cuts expire this month. President Obama wants to sever that link and place a cap on the savings a taxpayer could get when writing off charitable gifts.

“A cap on the charitable deduction is a pretty big deviation from current policy,” said Alexander Reid, a Washington tax lawyer who previously worked for Congress’s Joint Committee on Taxation. “One way of looking at it is if there’s a difference between the 39.6 percent top marginal rate and 35 percent, that’s a 4.6 percent tax on those charitable gifts. That’s a substantial change in policy.”

Most nonprofit leaders agree that the 35 percent and 28 percent  caps are better than the Republican calls to place a ceiling of up to $50,000 on all tax deductions. Nonprofits fear that taxpayers would max out that dollar cap on the deductions they take for mortgage-interest payments, state and local taxes, and medical care, leaving little tax incentive for giving to charities.

William Daroff, vice president for public policy at the Jewish Federations of North America, said the White House’s new proposal indicates that nonprofits are succeeding in convincing the president that the charitable deduction differs from other tax breaks such as for mortgage interest. The proposal floated by the White House called would limit tax savings for other purposes to 28 percent.

Several nonprofit leaders such as Mr. Daroff and Ms. Aviv said they appreciated the president’s recognition that the charitable deduction should be treated differently. But severing the deduction from the tax rate would leave it vulnerable to being lowered again in the future.

“By decoupling it, you create a dangerous precedent,” Ms. Aviv said.

Nonprofits have said changes to the deduction could reduce charitable giving by as much as $7-billion annually.

The Center on Budget and Policy Priorities has said the impact would not be as dire as charities have stated.

“Our view was that even the original Obama proposal of 28 percent was not nearly as bad as the charities were contending,” said Paul Van de Water, a senior fellow for the center. “This [35 percent] would have an even smaller effect.”

“Going up to 35 percent does seem like a reasonable compromise on the part of the Obama administration if they can get it through,” said Lester Salamon, director of the Johns Hopkins Center for Civil Society Studies. “But it depends on what else is done on the other tax battles, if they can get more out of the tax side in the budget than the other side is willing to concede.”

Tim Delaney, chief executive for the National Council of Nonprofits, said that the inability of Congress and President Obama to forge an agreement to avoid the fiscal cliff so far indicates that the two sides could eventually land on a deal that is worse than any of the three limits on the charitable deduction that have been publicly debated.

“It’s not one or the other,” Mr. Delaney said of the debate over whether to place a cap on the percentage of donations that could be written off or a dollar maximum on all deductions. “There’s a huge trap door that we all see beneath us. We’re just hoping no one pulls the lever and we all drop through it.”

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 deductions while limiting deductions for paying mortgage interest and state and local taxes to 28 percent.

“It seems favorable that there would be a cap on most deductions but a higher one on charitable deductions,” said Deborah Weinstein, executive director of the Coalition on Human Needs.

Ms. Weinstein, like other nonprofit officials, was unable to confirm the proposal with White House officials, but its details were circulating throughout the day. Politico Pro reported that charitable deductions would be capped at 35 percent. The White House would not verify the numbers, but in a press briefing, Obama spokesman Jay Carney said: “There are a series of other pieces of his revenue proposal that deal with some reform measures, like capping deductions and other issues.”

Gary Bass, executive director of the Bauman Foundation and a veteran Washington insider, said Independent Sector’s two-page advertisement in the newspaper Politico last week advocating for the charitable deduction “stirred things up quite a bit.”

The letter, which called for preserving the charitable deduction, was signed by more than 900 nonprofit leaders. It came a week after more than 250 nonprofit officials hit Capitol Hill in a lobbying day to protect the charitable deduction.

“The Republicans responded by saying that their intent is not to undermine charities,” Mr. Bass said. “So I think there is sensitivity to the charitable deduction right now.”

“The White House had been quite happy with 28 percent before,” he added.

Independent Sector’s chief executive, Diana Aviv, said widespread advocacy from nonprofits across the nation was having an impact. She, too, had not been able to confirm the White House proposal.

“Whatever gets put forward is only true in the moment that it is put forward,” Ms. Aviv said. “It would not be right to assume anything just yet.”

But, she added, “it would be encouraging if the president had done that for sure.”

“If there is fluidity and movement in regards to treating the charitable tax deduction differently than other deductions, then that’s terrific,” Ms. Aviv said. “It means the community’s voice has been heard.”

Mr. Bass agreed with Ms. Aviv that so many proposals are being thrown around that it is not time to think conversations about charitable-deduction limits are over. In particular, nonprofit advocates expect the real-estate lobby to protest the placement of the 28-percent limit on mortgage interest deductions.

“Let’s face it, when push comes to shove, the real-estate agents are going to be in there, too,” Mr. Bass said. “They carry more clout in terms of political contributions.”

United Way Worldwide’s senior vice president for public policy, Steve Taylor, said separating the charitable deduction from others would be a “positive step” if it is true.

His organization, however, would prefer not to see a 35-percent cap. Instead, it wants to continue to tie the maximum deduction to the top income-tax rate, which is currently 35 percent. President Obama wants to raise the top rate to 39.6 percent on income over $400,000. Mr. Taylor said an ideal result would be for the maximum charitable deduction to increase with the top rate.

“You just don’t want to go down the road of decoupling the deduction rate from the marginal tax rate,” Mr. Taylor said. “We still have a long way to go.”

Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities, said the president’s Monday night proposal, calling for $1.2-trillion in new revenues, is a compromise from his original $1.6-trillion plan. The $400-billion difference, driven mainly by the president’s compromise to apply higher tax rates to income over $400,000 instead of $250,000, may have to be made up in spending cuts to social programs that would hit nonprofits hard.

That’s what scares Ms. Weinstein.

“For us it is disappointing to extend the tax cuts beyond the $250,000 level,” she said. “Because we need the money.”

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 persuade President Obama and Congress to avoid legislation to limit or abolish charitable deductions.

Independent Sector declined to say how much it paid for the two-page advertisement, but in late November it sent an e-mail to its members seeking donations of $250 to $1,000 to pay for it. A Politico rate card for 2011 showed that a full-spread color ad cost $24,340, but did not specify rates for nonprofits.

The advertisement comes a week after more than 250 nonprofit officials lobbied members of Congress to protect the charitable tax deduction as part of the Charitable Giving Coalition.

White House officials have stepped up their pressure on nonprofit leaders as well. In three meetings last week, senior Obama administration officials asked nonprofit leaders to support the president’s plan to raise the highest rate now paid, 35 percent, to 39.6 percent on the wealthiest taxpayers.

Mr. Boehner has rejected the concept and wants to produce more government revenue by closing tax loopholes and deductions.

White House officials have been telling nonprofit leaders that the Republican plan includes a proposal to place an annual limit on all itemized deductions, including the mortgage deduction, at $17,000 to $50,000 per taxpayer.

President Obama’s plan proposes to reduce the tax deduction that wealthy people get for their charitable gifts from 35 percent to 28 percent.

But some nonprofit leaders, including Diana Aviv, chief executive of Independent Sector, have resisted taking political sides on the issue. The Alliance for Charitable Reform issued a statement last week saying the White House should not be pressuring charities to join the “political wrangling” around the issue.

Independent Sector’s letter to the president and Congress says that plans to limit the deduction would deter giving.

“We are deeply troubled by reports that an aggregate cap, whether a dollar-limit or percentage, on the value of the charitable deduction is under consideration as a potential short-term revenue solution during the lame-duck session,” says Independent Sector’s letter. “Research has suggested that a cap on the charitable deduction could reduce charitable giving by as much as $7-billion a year; this would come on top of the nearly $20- billion annual decrease in giving since the economic downturn began in 2007.”

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 into effect on January 2.

Support doesn’t just come from Republicans. The Committee for a Responsible Federal Budget has advocated for the $25,000 cap as one way to avoid tax-rate increases that would still raise revenue predominantly from higher-income individuals.

“Capping these deductions at a dollar amount, for example $25,000, would in itself be progressive, given that two-thirds of taxpayers don’t rely on itemized deductions and only 11-percent have deductions as high as $25,000,” states a November 15 report by the committee’s president, Maya MacGuineas.

But nonprofit leaders say that taxpayers who do itemize would hit the cap by first applying other deductions, including one for mortgage payments. Once the cap is met, they argue, taxpayers would have far less incentive to give to charities.

“Plausible tax expenditure limitations that protect middle-class families, and incentives to give to charity would raise far less revenue from the well off than is needed for a major budget agreement,” the White House blog says.

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