The Associated Press reported earlier this week that American charitable giving dropped 2% last year, according to the Giving USA Foundation. This was only the second time in the history of the Foundation’s survey that overall charitable giving had decreased; the last time was 1987, the same year as the “Black Monday” stock market drop.
The total amount of charitable giving in 2008 was $307.65 billion, according to the report, down from a record $314 billion in 2007. While a drop in giving is rare, experts at the Foundation were surprised it was not worse due to the extremely unsettled economy.
“We definitely did see belt-tightening,” said Del Martin, chair of the Giving USA Foundation. “This drop in giving meant that nonprofits have had to do more with less over the past year, but it could have been a lot worse.”
The story comes as Congress and the Obama administration are considering ideas to pay for a series of agenda items, including health care reform. In his fiscal year 2010 budget, President Obama proposed reducing the charitable tax deduction for families making over $250,000 a year from the current 33% rate to 28%. However, the Indiana University Center on Philanthropy has estimated that reducing the tax deduction could cost charitable organizations billions of dollars in the current economy. Using tax forms from 2006 and applying the changed tax rate, the center found that giving by families making over $250,000 would have decreased 4.6%. This data and the new Giving USA Foundation survey may make the deduction rate change a political pitfall.
Should Congress reduce the charitable tax deduction for families making above $250,000 or will this hurt the charitable sector?
Quick Hits
Maryland nonprofits and associations working together to improve the economy (from Tom Hood, CPA)… New House health care time line and is the soda tax a non-starter?… Washington Post’s Ezra Klein interviews Senator Conrad on his co-ops plan… Centrist House Democrats struggle over public option.
Yes, congress should absolutely reduce the charitable tax deduction for families making above $250,000. It’s all part of the greater effort to pay for true health care reform. The revenue will help pay for the public option in President Obama’s proposal to ensure that all Americans are covered with quality, affordable health care. The philanthropic community should keep in mind the interests of the disadvantaged and the most needy in our society. Universal health care should be a priority for those interested in serving their communities and raising our societal standard of living.
Furthermore, I don’t think that reducing the charitable tax deduction rate from 33% to 28% will be a deal breaker for most wealthy donors. They don’t give to charities to deduct taxes, they give because they believe in the work and mission of the organization(s). It will thus NOT hurt the sector, but rather alleviate some of the long term costs associated with so many Americans historically living with inadequate or no health care.
How can we develop a decision on whether a change in a tax deduction on those making over $250,000/year will effect charitable donations, when we do not know how many people or families that represents in the total number of workers, and, when we are just lucky to have jobs that pay just over minimum wage in many of the charities/nonprofit organizations?
There is a simple way to produce billions of dollars of long-term funding for social causes. There is a way to harness the power of Capitalism for the Common Good that avoids government spending, taxes, stimuli, or bailouts. Companies can grant Social Bonuses by donating warrants to charity – something that doesn’t cost them anything to give – and get a deferred tax deduction for the value of the gift. To learn more go to: http://www.Stargazer.org/causes.