Attack on Charity Deduction is a Civic Threat
As federal lawmakers head into an intense period of debate on the budget and tax reform, there is growing and urgent concern that they are seriously considering unraveling a 100-year-old American tradition that encourages charitable giving and benefits millions of people here in Ohio and throughout the country. The tradition in jeopardy is the provision that allows people to report and deduct donations they’ve made to charities.
In Ohio, about one-quarter of all taxpayers use this deduction, which is designed to encourage donors to support worthy causes: that’s 1.33 million Ohioans. Add up the donations they made to charities in 2010 and it comes to an incredible $5 billion. And, people at virtually every income level take advantage of the charitable deduction. About 25 percent of the 1.33 million Ohioans who itemized their deductions made less than $50,000 a year and together they gave $638 million to charities. About two-thirds had income between $50,000 and $200,000 and gave $2.58 billion.
While elected officials express support for the value and impact of charitable giving, proposals on the table indicate a very real threat to incentives that encourage this kind of generosity. Consider President Obama’s proposed budget, which calls for a limit on the amount taxpayers can claim for their charitable contributions. Such a move puts at risk billions of dollars in donations and could spell disaster for Ohio’s nonprofits, the nearly 483,000 people who work at these organizations and the hundreds of thousands of people who rely on them. That’s why the philanthropic sector – including Philanthropy Ohio – is acting now to make sure elected officials understand what is at stake.
Limiting or capping the charitable deduction defies logic, particularly when we are still reeling from the effects of the recession, with the Ohio unemployment rate hovering at 7 percent and an increased demand for services that heal, educate and innovate with fewer resources to get the job done.
In fact, a recent survey from the Nonprofit Finance Fund reveals that half of the Ohio charities say they could not meet demands for assistance last year and expect the number to increase this year. One in three charities had less than 30 days’ cash in hand.
Americans understand the value of giving and the charitable deduction. According to a recent public opinion poll conducted by United Way Worldwide, nearly 80 percent of Americans agree reducing or eliminating it would have a negative impact on charities and the people they serve. Nearly two-thirds would reduce their contributions by 25 percent or more, a significant negative impact.
The charitable deduction is a unique and effective way for individuals to invest in their communities, and it works. Together, philanthropy and nonprofits spur innovation, aid the most vulnerable, provide relief in a crisis, support education and health, advance cures and scientific breakthroughs, enhance the arts, make investments that fuel economic growth, and more.
You don’t have to look very far to see or experience the inextricable link between charitable giving and thriving communities. Right here in Central Ohio, the Mid-Ohio Foodbank relies on individuals who provide just over 50 percent of its total revenue each year. That’s 50,000 donations, with more than $5 million going to feed hungry people throughout Central Ohio.
Without the continued support of such generous individuals, nonprofits will be forced to slash or abandon their work. If lawmakers tamper with the charitable deduction, we risk losing our ability to provide food and shelter, prepare our children for success in school and work, help families become financially stable and strengthen health care services for our most vulnerable populations.
Tough decisions must be made to tackle the nation’s fiscal challenges without hurting our communities. We understand that. But reducing the value of the charitable deduction is not a solution. We should be working together to find ways to encourage more giving, not less. We hope Ohio’s congressional delegation, including Senators Brown and Portman who serve on the Senate Finance Committee and Representative Tiberi on the House Ways and Means Committee, will stand up for the charitable deduction.