Foundations to Congress: Tamper With Charitable Deduction and Communities Lose

Millions of people throughout America are at risk of losing crucial nonprofit services if Congress enacts limits to the century-old charitable tax deduction. Hundreds of foundation and philanthropic leaders are in Washington, D.C., this week during Foundations on the Hill (FOTH) to make sure lawmakers understand that unraveling the charitable deduction is not a solution to the budget crisis.

The timing is key as Congress and the president tackle deficit reduction and tax reform. The House and Senate both released their budget plans last week and the proposed Senate budget suggests limits to itemized deductions—one of which is the charitable deduction—putting at risk billions of dollars in charitable donations.

“The charitable deduction is unlike anything else in our tax code, encouraging people to invest in their communities without personal gain,” said Kevin Murphy, president of the Berks County Community Foundation in Pennsylvania and board chair of the Council on Foundations. “Limiting the charitable deduction would have the greatest impact on those who need the most help, especially during tough economic times. How could we possibly limit or tamper with incentives that allow people to give away their income to benefit others?”

FOTH is an annual event sponsored by the Council on Foundations, the Alliance for Charitable Reform, and the Forum of Regional Associations of Grantmakers. It brings together hundreds of leaders from the philanthropic sector to make sure elected officials clearly understand the inextricable link between charitable giving and thriving communities—from jobs and economic growth to spurring innovation and improving education, health care, human services, and more.

Gloria Johnson Cusack, executive director of Leadership 18, an alliance of CEOs leading America’s largest nonprofits, said: “I don't believe any policymaker intends to undermine charities. But the fact is that major decisions about a range of issues are going to be made very quickly behind closed doors in this unusual legislative environment. That's why we have to act now to make sure lawmakers understand that giving will go down significantly if they change good, existing policy that incentivizes people to support communities. We know policymakers face tough decisions, but now is not the time to experiment with the charitable deduction. The burden falls on nonprofit organizations and the people they serve.”

Michael Litz, president and CEO of the Forum of Regional Associations of Grantmakers, said: “Philanthropy is an independent, innovative investment for improving our communities and it needs to be preserved, recognized as different, and encouraged, now more than ever. It is critical that we educate members of Congress about how philanthropic innovation tackles society’s greatest challenges and benefits their constituents—by educating children, improving lives, revitalizing neighborhoods, and strengthening communities.”

Lawson Knight, executive director of the Blue Mountain Community Foundation in Washington state, said: “Giving to others sustains positive change where I live. In our area, charitable giving resurrected a local theater, renewed a downtown area, built parks, and provided swimming lessons for children and scholarships for aspiring college graduates. Giving is not simply a luxury afforded to those taking a charitable deduction. It is central to the American experience. It is essential that it remain so.” 

“When it comes to who benefits from the charitable deduction, we think of people in need, not donors who take a deduction,” said Peter Bird, president of the Frist Foundation in Nashville, Tenn. “Those who benefit from our grants range from families seeking health care and job opportunities to Alzheimer’s patients and their loved ones. When you think about revenue, tax reform, deductions, and exclusions, think about how all of that would impact the way we care for each other.”  

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The Council on Foundations, formed in 1949, is a nonprofit membership association of grantmaking foundations and corporations. Members of the Council include more than 1,700 independent, operating, community, public and company-sponsored foundations, and corporate giving programs in the United States and abroad. The Council’s mission is to provide the opportunity, leadership, and tools needed by philanthropic organizations to expand, enhance, and sustain their ability to advance the common good. www.cof.org

The Alliance for Charitable Reform (ACR) works to advance the principles that promote vigorous private giving to charities and to preserve the rights of these donors. A project of The Philanthropy Roundtable, ACR educates legislators and policymakers about the central role of private giving in American life and thus the importance of protecting philanthropic freedom—the ability of individuals and private organizations to determine how and where to direct their charitable assets. ACR seeks to prevent policies that would diminish private giving, limit the diversity of charitable causes Americans support, or place undue government regulations on philanthropic organizations at both the federal and state level. www.acreform.com

The Forum of Regional Associations of Grantmakers (the Forum) is the national philanthropic federation and network of 34 regional associations of grantmakers serving nearly 5500 grantmaking entities and funder collaboratives. The mission of the Forum network is to connect and support regional associations—in ways that expand their capacity to lead, add value to their members, and strengthen philanthropy in their regions—and to bring the knowledge and experience of the regional associations into the national conversation on philanthropy. www.givingforum.org