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Lawmakers Get Earful On Protecting Charitable Deduction

By Paul Clolery - November 20, 2013

Two United States senators have drafted a letter to their leadership to save the charitable deduction at its current levels. The letter was unveiled today in Washington, D.C., during “Protect Giving Day.”

The bi-partisan support of Sens. John Thune (R-S.D.) and Ron Wyden (D-Ore.), both members of the Senate Finance Committee that oversees tax policy, warned in the letter that any limitations to the charitable tax deduction would have consequences. It is being circulated for additional signatures from other senators.

An estimated 200 representatives from the 140 nonprofit organizations were on Capitol Hill in support of the charitable tax deduction, which has been a target of those seeking to add revenue to the federal coffers, said Sandra Swirski, executive director of the Alliance for Charitable Reform in Washington, D.C.

“We write to you to underscore the importance of protecting the full value and scope of the charitable deduction during a comprehensive rewrite of the tax code,” according to text of the letter. “Analysis has repeatedly shown that proposals to cut, cap, or limit the charitable deduction could cause charitable donations to decline by billions of dollars annually. Worse yet, weakening the charitable deduction would most hurt the adults and children who receive vital charitable services from organizations like soup kitchens, after-school programs, and medical research projects, just to name a few.

“In many cases, the government would be required to step in and fund those services now being provided through private generosity,” the letter continued. “Accordingly, preserving the charitable deduction is also prudent as a matter of broader fiscal policy. We believe the federal government must affirm its long-standing dedication to encouraging private acts of charity and compassion, especially when our charities and the people they serve are facing so many challenges.”

Swirski said she is hopeful that a similar letter will be drafted on the House side.

The coalition is encouraged by the senators’ emphasis on the fact that the charitable deduction is not about the donors, but what donors’ dollars do to support worthy causes in America’s communities. The statement of support represents an important reframing of the issue to reflect the value and impact of the charitable deduction outside the beltway, she said.

“America has a remarkable tradition of giving back. It is a reflection of our society’s values,” said Father Larry Snyder, president of Catholic Charities USA. “Our communities need policies that help encourage charitable giving, not discourage support of our neighbors in need.”

Among the leaders of the push were members of the Charitable Giving Coalition – a group of more than 60 nonprofits, foundations and other charitable organizations. “We applaud Senators Thune and Wyden for their recognition of the central role of private charitable giving in strengthening our civil society and for their willingness to be catalysts for public, bipartisan support for the charitable deduction,” said Adam Meyerson, president of The Philanthropy Roundtable.

The message was clear – “I am the charitable deduction” – making the link between charitable giving and communities. There is also a Protect Giving YouTube channel and petition drive.

“Limiting the value of the charitable deduction would hobble the capacity of charities to provide assistance to families and individuals in need,” said Stacy D. Stewart, U.S. president of United Way Worldwide. “Reductions in charitable services would come as federal and state governments continue to cut funding for social programs, and would amount to a double hit to children and families in need,” she said.

“Government cutbacks are already hurting our nation’s most vulnerable communities. To couple them with a reduction in charitable funding would be devastating,” said Vikki Spruill, president and CEO of the Council on Foundations.

At a congressional staff lunch briefing with Coalition leaders and tax policy experts, new research was shared from an upcoming report about the recession’s impact on charitable giving and the potential impact of limits to the charitable deduction. Arthur Brooks, Ph.D., president of the American Enterprise Institute, said that charitable giving stands at pre-recession levels and might not grow again strongly for several years. Also, the proposed 28 percent cap on the charitable deduction could cause giving to decline by nearly $10 billion in the first year.

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