Business of Giving: Cutting Tax Breaks for Charitable Contributions?
This bad idea could hit nonprofits where it hurts.
As outlined, donors who earn more than $250,000 per year will only be able to deduct 28% of their gift from their taxes, as opposed to the current 35%.
My question is this: Why are we punishing the donors and charities that are crucial for shoring up society during these difficult financial times?
This proposal will undoubtedly have a dampening effect on donations. It ignores the crucial role nonprofits play in getting the government's work done. My nonprofit, The Children's Aid Society, finds foster homes for abused children, provides health care for the uninsured, gives youth the after-school activities they need to keep them out of trouble and finds housing for homeless families. Yes, we get government funding, but much of what we do is paid for by private donations. Why reduce the revenue charities need at the very time that more and more people require our services?
Tightening a nonprofit's belt in this way has another consequence. Many of the most innovative and successful ideas for solving society's ills come from the front lines, where nonprofits work. When funds are scarce, nonprofits are unable to conduct the outreach, research and development necessary to find better ways to solve society's most intractable and expensive problems.
And it's these ideas that, in the end, save the government money, as we figure out better, quicker and more efficient ways to help those in need. The lack of this research and development cements a system that keeps doing the same thing over and over again, regardless of whether it works. Our failure to find successful ways to manage juvenile-justice and foster-care cases shows that these dead-end approaches aren't just wasteful, but harmful to the very people they're meant to help.
Nonprofit agencies should be given the respect and the resources they require. We're the safety net for those who fall through the thinning social fabric. Charities are already fighting for every dollar, as donors tighten their household budgets, companies reduce their charitable giving and we see our own endowments shrink along with the Dow Jones. So how can anyone justify weakening us even more than we already have been?
I truly believe that if you're not part of the solution, you're part of the problem. A budget plan that limits tax deductions and threatens the revenue stream of nonprofits makes it impossible for us to prepare for shortfalls and meet the growing demands for services. So shouldn't we be focusing on ways to encourage taxpayers to contribute to charities instead of reducing the incentive? When people give more, charities can do more, which means government can do less when it needs to. It's win-win-win for everyone.
On a personal note, I'd like to extend my condolences to the family and friends of Bennet Sedacca, and especially to my friend Todd Harrison. Minyanville has lost a vital voice and I join in the sorrow over his passing.
In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to affect positve change in the lives of children.
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