White House, nonprofit groups battle over charitable deductions
Source: Washington Post
But the White House is also looking to limit the charitable deduction for high-income earners, and that has prompted frustration and resistance, with leaders of major nonprofit organizations, such as the United Way, the American Red Cross and Lutheran Services of America, closing ranks in opposing any change to the deduction.
“It’s all castor oil,” said Diana Aviv, president of Independent Sector, an umbrella group representing many nonprofits. “And the members of the nonprofit sector I represent don’t want any part of it. It’s a medicine we’re not willing to drink.”
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The frustration stems in part from what some nonprofit leaders describe as a philosophical disagreement between Obama and the non-profit sector. The president has framed the tax deduction as a benefit for the wealthy, they say, while in their view the deduction is a benefit for charities that use the money to help the needy.
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But Kies acknowledged that “no one knows exactly” how much reducing the deduction would impact giving. A report last year by the Center on Philanthropy at Indiana University concluded that the effect of Obama’s proposals to reduce the charitable deduction and raise tax rates for the wealthy would be a “relatively modest decline” of up to 1.3 percent in itemized giving, or $2.43 billion a year. Other estimates have ranged as high as $7 billion a year.
Some in the sector are skeptical that there would be any significant change at all.
Read more: http://www.washingtonpost.com/politics/white-house-nonprofit-groups-battle-over-charitable-deductions/2012/12/13/80e67400-43f2-11e2-9648-a2c323a991d6_story.html
I think the President is wrong on this one. Incentivizing the well-off to help the less fortunate isn't a "benefit for the wealthy." Losing as much as $7 billion would really hurt social service agencies. There have been other deductions that have been talked about to get rid of; that conversation should continue, but I think the charitable deduction shouldn't be part of any "fiscal cliff compromise."
As Tocqueville noted, civil society and nonprofits are such an important part of a progressive society. They are laboratories for new initiatives and methods that can make huge impacts helping those in need.
It's such an important issue. I hope others agree that this needs a serious discussion and, at the very least, should be separate from any last-minute negotiations.
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