Fundraisers Fear Changes To Charitable Deduction

Most fundraisers expect a drop in donations if a plan by the White House to limit the charitable deduction is approved, but are split as to just how much it would affect giving.

In a “Quick Poll” by the Association of Fundraising Professionals (AFP) conducted between April 18 and June 19, more than half of the 525 respondents fear the passage of the White House’s Fiscal Year 2012 budget would have a “significant” impact on donations. The Obama administration has proposed capping itemized deductions at 28 percent for some of the nation’s highest earners.

While three-quarters of fundraisers surveyed believe the plan would negatively affect giving, they were split — almost equally — as to just how much an effect it would have. Some 27 percent predict a 25-percent drop in gifts, another 27 percent expect a 5- to 10-percent decline, and 23 percent foresee a 5-percent dip. Fewer than one in 10 fundraisers believe the budget proposal would have no effect on giving while 14 percent were unsure.

The federal government is misunderstanding the sector’s needs, according to Andrew Watt, FInstF, president and CEO of the Alexandria, Va.-based AFP. “The White House and Congress must understand that limiting the value of itemized deductions for charitable contributions will dramatically affect the charitable sector and those it serves,” he said.

Despite giving trends looking upward as indicated by a 2 percent rise in the Giving USA numbers for 2010, Watt contended that the sector still has much work to do for giving to bounce back from pre-recession levels. “2008 and 2009 were two of the worst fundraising years ever, with significant drops in giving across the board affecting every type of charity,” he said. “Capping the deduction just as we’re starting to see the smallest signs of economic recovery is exactly the wrong move to take.”