Warning to government: Keep your hands off charitable deductions Print
Written by Mary C. Uhler   
Thursday, Dec. 13, 2012 -- 12:00 AM

Editor's View by Mary C. Uhler

As our country faces the “fiscal cliff,” our government is considering proposals to keep us from falling off that cliff at the beginning of 2013.

Basically members of Congress and President Barack Obama have to come up with a combination of more revenue  and spending cuts in order to avert the fiscal cliff.

One way to achieve more revenue is to put a cap or ceiling on tax deductions. Among those deductions that could be considered is the tax deduction for charitable donations.

Wrong approach

In my opinion, this would be a wrong approach to our economic problems. In fact, it might create new challenges if people are discouraged from charitable giving.

We already have a large number of people who rely on charities for assistance with the basics of life: food, clothing, and shelter. I can’t imagine what would happen to people already in need if charitable donations were reduced.

Of course, most people don’t give donations only because they get a tax donation. But if the tax donation were capped, people would probably give less. They wouldn’t have an incentive to donate more to those in need.

A Catholic News Service article reported that Fr. Larry Snyder, president of Catholic Charities USA, predicted that if tax deductions are capped, “there will be a definite decrease in the philanthropy that charities will see.”

Leave charitable contributions alone

Leaders of charitable organizations flew to Washington December 4 to 5 to lobby members of Congress and White House staffers to leave charitable contributions alone.

“First of all, it's not just a tax incentive for millionaires,” Father Snyder told Catholic News Service. “The majority of the gifts that come to Catholic Charities organizations — and I think last year we had almost $900 million in charitable giving — they are $1,000, $2,000, $5,000 gifts.

“But those people do itemize,” he added. “It’s 30 percent of the public, but the number of millionaires is far less than that. It really is folks wanting to support the work of the nonprofit sector.”

Individual donations predominate

A report on giving in 2011 from the Giving USA Foundation and the Center on Philanthropy showed that close to $300 billion was given to charities, reported Catholic News Service.

Individuals accounted for the vast majority of the charitable gifts, which has been the case, the foundation said, since it first began examining charitable donations in 1955.

Religious organizations received $95.88 billion in 2011 and they remain the largest type of recipient, the report said.

Frank Wright, chairman of the National Religious Broadcasters, a largely Protestant organization, called charitable deductions “a public policy that has proven its worth for nearly a century.” He added, “Rather than capping or otherwise constraining this long-standing deduction, the federal government ought to expand opportunities for the charitable impulse of Americans to thrive.”

President Obama, in a December 4 interview with Bloomberg TV, dismissed the concept of a deduction cap. "If you eliminated charitable deductions, that means every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse. So that's not a realistic option,” President Obama said.

Importance of philanthropy

“Philanthropy does things that government doesn’t do well” or “doesn’t do at all,” said Robert Grimm, director of the Center for Philanthropy and Nonprofit Leadership at the University of Maryland School of Public Policy, as reported by Catholic News Service.

Grimm pointed to his own experience growing up in a rural Iowa town of only 300 that was home to the state's only professional theater company, thanks to philanthropy. He also pointed to the example of Benjamin Franklin, who created Philadelphia Hospital once he convinced the Pennsylvania state government to pay half the cost if he could raise the rest.

Our Catholic parishes, schools, hospitals, and charitable agencies depend on donations. I hope that our government leaders will keep their hands off our charitable deductions and find other ways to escape the fiscal cliff.

Let’s not play Scrooge with charitable deductions. There must be better ways to solve our fiscal problems.