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Don’t Eliminate the Charitable Tax Deduction
Congress and the Obama administration must recognize how important the nonprofit sector is
Brian Gallagher is president and CEO of United Way Worldwide. Father Larry Snyder is president of Catholic Charities USA.
The season of giving is a time to focus on what we hold dear. Hurricane Sandy certainly demonstrated that what we take for granted is what we miss most when it is taken from us. As leaders of nonprofits providing a broad cross-section of services to our communities, we worry this might be the case with the charitable tax deduction.
President Obama and Congress are considering caps or cuts to the 100-year-old tax benefit for those who give to charities and redirecting these dollars to federal coffers. Doing away with the charitable deduction at a time when people are still reeling from the recession and facing the consequences of government cutbacks is bad timing and bad logic. In short, fewer charitable dollars and government cutbacks are a double hit to those who need help the most.
On December 4 and 5, hundreds of leaders serving our communities will travel to our nation’s capital to make sure elected officials understand what is at stake. These leaders represent the Charitable Giving Coalition, which includes more than 50 of America’s most active charities, nonprofits and other organizations, including United Way, Catholic Charities USA, American Red Cross, American Institute for Cancer Research, and more.
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We hope to pierce the “inside-the-beltway” bubble with a dose of reality from thousands of communities outside the beltway. Congress and the administration must recognize how important the nonprofit sector is to our country. For example, relief charities responding to Hurricane Sandy-ravaged communities raised nearly $100 million, according to the Chronicle of Philanthropy. United Way of New York City and affiliates throughout the East set up a Hurricane Sandy Relief Fund (#sandyfund) to support affected communities through food, shelter, clothing, cleanup, and rebuilding.
Catholic Charities USA also set up a Hurricane Sandy fund. Since Katrina, Catholic Charities USA and its nationwide network helped thousands of families recover and rebuild their lives after disasters.
This independent, nonprofit infrastructure and long-standing experience in meeting community needs is invaluable. Last year, Americans gave nearly $300 billion to support crucial programs and services, from food pantries and medical research to youth programs and seed grants to start new businesses.
Elected leaders may believe the charitable deduction is an easy mark without a large contingent of lobbyists. But the charitable deduction is different than other itemized deductions. It encourages giving, rewards a selfless act, and helps raise more for charities than would have otherwise been possible. Data suggests that for every dollar a donor gets in tax relief, the public typically receives $3 of benefit. No other tax provision generates that kind of positive public impact.
- Nonprofits generate $1.1 trillion every year through human services and provide 13.5 million jobs.
- Nonprofits account for 5.4 percent of the GDP and 9 percent of all wages paid.
- This diverse sector supports development of medications like insulin and the polio vaccine; educational opportunities and access to better healthcare; technologies such as the MRI, electron microscope and pacemaker; housing and shelter for the need; access to cultural activities
According to Giving USA, individual contributions to charitable causes in America account for 73 percent of all giving. These donations help achieve breakthroughs and benefits that put our country on a path of continuous improvement. Research shows that donors trust the nonprofit sector most when it comes to providing these crucial community services.
Now is not the time for Congress to dismantle this century-old incentive that supports America’s nonprofits. According to the Nonprofit Finance Fund, 85 percent of nonprofits experienced higher demand for their services in 2011. That number likely increased in 2012. The nation’s budget crisis is undeniable, but that is precisely why nonprofits need more support, not less.
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