A $350-billion student loan relief proposal by the current front-runner for the Democratic presidential nomination will look familiar to charities. Hillary Clinton, who leads Democrats for the 2016 nomination, this week unveiled the “New College Compact,” a plan that aims to make college tuition more affordable, including tuition-free two-year colleges, and make student loan debt less onerous.
The plan would cost about $350 million over 10 years, according to the Clinton campaign, and would be paid for by “limiting certain tax expenditures for high-income taxpayers.” The charitable deduction has been regularly on the chopping block in recent years, with President Barack Obama proposing a similar cap in each of his initial federal budgets.
The Charitable Giving Coalition (CGC) issued a letter this summer to all presidential campaigns explaining the importance of the charitable deduction. The CGC plans to contact all major presidential candidates to urge support for the full preservation of the charitable deduction.
Similar to President Obama’s 28-percent cap, the Clinton plans a cap on deductions is applied across the board and does not carve out any itemized deductions, such as the charitable deduction, according to The Charitable Giving Coalition (CGC).
The CGC plans to contact every officially declared candidate featured in major polls for the 2016 election for President of the United States urging them to support the full preservation of the charitable deduction. The coalition has drafted a letter to all presidential candidates urging them to support the full preservation of the charitable deduction. The letter is signed by 44 nonprofit and advocacy organizations including: United Way Worldwide, Independent Sector, the DMA Nonprofit Federation, Alliance for Charitable Reform, and the Association of Fundraising Professionals (AFP).
AFP released a statement yesterday urging the Clinton campaign to reconsider funding mechanisms for the New College Compact rather than capping itemized deductions at 28 percent for certain families and individuals. “Although the goal of Mrs. Clinton’s plan may be laudable, we are concerned with the proposed funding mechanism that effectively diverts money away from charitable causes,” AFP President and CEO Andrew Watt said. “We advocate for more thoughtful consideration of any funding mechanism that could negatively impact charitable giving,” he said.
A proposed cap on deductions represents a potential loss of $80 billion in charitable contributions over a 10-year period, according to AFP, but the impact would be greater than that. For every tax dollar invested through the deduction, nonprofits and the people they serve receive approximately $2.50 in charitable services in local communities.
“The overall effect of this proposal on charitable funding, and the impact it would have on programs, is massive and represents a huge step backwards for philanthropy in our country,” Watt said. “We should be encouraging additional philanthropy and investing more in the charitable deduction, not introducing ways to limit or cap it.”
While pleased that Clinton proposed to address an “issue that undermines the financial stability of so many Americans,” United Way Worldwide expressed concern about how to pay for it. “Given Secretary Clinton’s history of advocacy for charities, we were disheartened by her ‘pay-for,'” said Steve Taylor, senior vice president for public policy at United Way Worldwide. “Our hope is that her proposal will exempt the charitable deduction from the itemized deduction cap. We are reaching out to the Clinton campaign to discuss the proposal,” he said.
While advocacy organizations have come out against the means by which the Clinton plan will be paid for, others were encouraged that college affordability has taken center stage in the campaign.
The Clinton campaign said it’s been working closely with Historically Black Colleges and Universities (HBCU) and Hispanic-serving universities because “they serve some of America’s brightest students, who need the most support and too often have gotten the least of it.”
UNCF (United Negro College Fund) issued a statement calling the New College Compact a “bold effort to help students pay for college and reduce the burden” of college debt.
“We are pleased to see that one element of The New College Compact would support private historically black colleges and universities (HBCUs) and Minority Serving Institutions (MSIs) by establishing a $25 billion fund to help make tuition even more affordable at these institutions, preserve student choice, and create a strong pathway toward a college degree,” the statement said, adding that UNCF and its supporters are eager to hear more proposals from other presidential candidates.
Clinton leads Democrats for the presidential nomination, according to most major polls. The field of Democratic candidates includes former Vermont Congressman Bernie Sanders, former Maryland Gov. Martin O’Malley, former Virginia Sen. Jim Webb, and former Rhode Island Gov. Lincoln Chafee.