Friday, December 14, 2012

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Protect the Charitable Deduction

ACR Blog Roundup

The ACR blog (www.acreform.com/blog) highlights our thoughts on news of the day. For regular updates from our blog, follow us @ACReform on Twitter.

Featured on our blog this week are two videos reporting on the recent “Protect Giving – D.C. Days” event in Washington, D.C., and efforts by the Charitable Giving Coalition to protect the charitable deduction:

• 250+ Charitable Leaders Blanket Capitol Hill (Fox News Special Report by Jim Angle)
• Stuart Varney on Preserving the Charitable Deduction (Fox News Report by Stuart Varney)

Washington Roundup

With 17 days to go before going over the fiscal cliff, the mood in Washington is grim. Despite a recent poll showing that almost two-thirds of Americans support striking a deal before year’s end lawmakers have yet to show signs of significant progress.

More on the Cliff

Earlier this week President Obama and House Speaker John Boehner (R-OH) exchanged offers on how to avert the cliff, yet few details have been made public. The White House sent Speaker Boehner a second offer that included $1.4 trillion in new tax revenue over 10 years, which is slightly less than the original White House offer of $1.6 trillion, but still includes the 28% limitation on all itemized deductions. Proposed cuts to entitlement programs, such as Social Security and Medicare, in the offer remained at $600 billion, which House Republicans have consistently dismissed as too low and lacking specifics. The two sides are still hundreds of billions of dollars apart. Despite this gap, the President said Tuesday that he was “pretty confident” that the GOP would ultimately give in on raising rates for the top two income brackets to get to a deal.

White House Solicits Sector’s Help

The White House held two conference calls on Friday, December 7, one directed at faith-based and charitable organizations and the other directed at foundations, in an effort to generate support for the President’s fiscal cliff proposals which include higher rates on couples earning over $250,000, warn about the impact of decreased revenue on social programs, and highlight the detrimental impact of the Republican hard-dollar cap vs. the President’s 28% cap.

The strongest reaction to these calls came from the top two Republican tax writers in Congress, Senate Finance Committee Ranking Member Orrin Hatch (R-UT) and Ways and Means Committee Chairman Dave Camp (R-MI).  The statement noted “instead of bullying our nation’s charities, the White House should look at the calendar, stop the political campaign and start negotiating with Republicans to find a real and balanced solution that ensures America can both avert our fiscal cliff and confront our debt crisis.” (keep reading)

New Tax Writers

Regardless of what happens on the fiscal cliff, all signs indicate that the 113th Congress will be faced with overhauling the tax code.  In each new Congress, Committee assignments are made to fill spots left vacant by members who are not returning or who have taken other assignments and  adjusted to reflect the party breakdown in each chamber.  The House Ways and Means Committee added four new Republicans (Tim Griffin (AR), Mike Kelly (PA), Tim Scott (SC), and Todd Young (IN)) and three new Democrats (Allyson Schwartz (PA), Danny Davis (IL), and Linda Sanchez (CA)).  Last night, the Senate Finance Committee announced that two new Democrats will join the Committee: Michael Bennet (CO) and Sherrod Brown (OH).  New Republican assignments are expected before Christmas.  These new members, along with those who remain on the committee from the last session, will play key roles during any attempt at tax reform next year. We look forward to cultivating relationships with these Members of Congress as we head into next year.

United Way Poll

The United Way recently released a poll with some encouraging findings in support of the charitable deduction. The poll found that 79% of Americans believe reducing or eliminating the charitable tax deduction would have a negative impact on charities and the people they serve, and 67% are opposed to reducing or eliminating the charitable tax deduction. Furthermore, the poll found that the charitable deduction is used by people of varying income levels, not just high income individuals. The percentage of people indicating they use the charitable deduction is the same for households with incomes between $50,000-$100,000; $100,000-$150,000; and incomes over $150,000. The feedback from Capitol Hill about this study has been tremendous and reflects how generous America really is.

Consider This

The Charitable Deduction is on the Fiscal Cliff Table

Just to be clear: we are exhausted talking about the fiscal cliff.  And EVERYONE is talking about it.  Even some of our children are asking, “Can somebody explain the physical cliff to me?” And, we hear that at holiday parties around D.C., bartenders are mixing special drink concoctions they’re calling “the fiscal cliff.”  Wonder what a few of those will do for you?!

A big part of the conversation over the fiscal cliff has been what –if anything– to do about all of the deductions and credits in the tax code as a way to shore up more revenue.  Public discussion is growing nervous over what could happen to the charitable deduction while some are advocating for an end to the deduction as we know it... (keep reading)

Making Headlines

Charitable Deduction

As negotiations over the fiscal cliff and deficit reduction occur between the President and House Speaker Boehner, the charitable community has been active in voicing its opposition to any limits to the charitable deduction (proposed by both). ACR and others in the charitable community have activated our networks of members and supporters to educate their representatives, the public and press about the impact charity has on the lives of those in need. On Monday Independent Sector published a two-page ad in Politico with a message to Congress and the President: “Don’t push charities over the fiscal cliff.” Read more here and here.

Last week nearly 250 nonprofit leaders, gathered together by the Charitable Giving Coalition, descended on Capitol Hill to explain the impact of changes to the charitable deduction on the communities they serve. At the same time the White House asked nonprofit organizations to support its proposal of increasing tax rates on certain income earners and oppose the Republican’s plan, even producing a report to support its case. Read more here and here.

Following is a selection of recent articles since the last newsletter on efforts to protect the charitable deduction including the “Protect Giving - D.C. Days” event hosted by the Charitable Giving Coalition:

• 12/13/12 Reed Urges Republicans to Back Tax Breaks for Charity, Bloomberg
• 12/12/12 Charitable Tax Deduction: A Promoter of Giving, Politico
• 12/12/12 Philanthropies Oppose Talk of Limits on Tax Deductions, New Jersey Jewish News
• 12/10/12 Why Do We Have a Charitable Tax Deduction, Anyway?, MarketPlace
• 12/10/12 Lawmakers Consider Cutting Tax Deductions to Bring Down the Deficit, PBSNews Hour
• 12/9/12 Charities Fight Possible Changes on Tax Deductions, USAToday
• 12/8/12 Jobs Report Becomes Fodder in Fiscal Debate, New York Times
• 12/8/12 American Charities Face A Moment Of Truth Over The Fiscal Cliff, Forbes
• 12/7/12 Republicans Accuse the White House of ‘Bullying’ Charities”, The Hill
• 12/7/12 Charities Are Already Feeling Drop off From Fiscal Cliff Uncertainty, The Street
• 12/7/12 State’s Nonprofit Leaders Advocate Against Cutting Charitable Deduction, Crain’s Detroit Business
• 12/6/12 Eliminating Charitable Deduction Would Help Budget, Hurt Charities, ABCNews
• 12/6/12 Charity Groups Lobby Against Changes to Deductions, Boston Globe
• 12/5/12 As Fiscal Cliff Looms, Nonprofits Could See Funding, Donations Dry Up, Dallas Morning News (subscription)
• 12/4/12 Obama Says Republican Proposals Would Put Nonprofits at Risk, Reuters
• 12/3/12 Deduction Cap Proposal Alarms Charities Especially Colleges, who Rely More on Wealthy Donors, AP

Here are a sampling of op-eds in support of preserving the charitable deduction:

• 12/14/12 The Frontburner: Budget Proposal Threatens Essential Work of Charities, Orlando Sentinel (David Odahowski, Edyth Bush Charitable Foundation)
• 12/13/12 Charitable Deduction Should be the Last Thing Congress Cuts, Mercury News (Emmett Carson, Silicon Valley Community Foundation)
• 12/11/12 Another Voice: Ending Tax Deduction Would Cost More Than it Saves, Buffalo News
• 12/7/12 Don’t Remove Another Effective Tool for Charities!, Huffington Post (Kyle Caldwell, Michigan Nonprofit Association, and Robert Collier, Council of Michigan Foundations)
• 12/6/12 Scoring the Fiscal Cliff, Huffington Post (Jesse Rosen, League of American Orchestras)
• 12/6/12 Obama was for Eliminating Charitable Deductions Before He was Against It, Examiner
• 12/4/12 12/3/12 Hands off Charitable Deductions, The Hill (Earle Mack, New York State Council on the Arts)
• 12/2/12 Let’s Be Honest About What the Fiscal Cliff Means For Nonprofits, GOOD (Mike King, Volunteers of America)
• 12/2/12 Do the Math: Abolishing the Charitable Deduction Will Cost Charities Billions, Chronicle of Philanthropy

Visit our Charitable Deduction Central for news, opinion, background and updates on the Charitable Giving Coalition’s efforts to protect the charitable deduction.
 

State/Local

Washington:  In an effort to raise additional revenue the Tacoma City Council voted recently to eliminate the tax exemption of the city’s nonprofit hospitals with annual gross incomes over $30 million. Also see: Ending Hospitals' B&O Break is Shortsighted, The New Tribune.

Comings & Goings (Nonprofit Leadership)

Social Innovation Fund: After less than two months on the job Idara Nickelson is leaving her position as director of the Social Innovation Fund to work for an international nonprofit.

Kauffman Foundation: The Ewing Marion Kauffman Foundation has selected longtime board member and business leader, Thomas McDonnell, to serve as its new chief executive.
Also see: Ewing Marion Kauffman Foundation Gets New Leader, Kansas City Star

This Caught Our Eye

Year-end Giving: Prompted by fiscal negotiations in Washington that include possible changes to the deduction for charitable gifts, donors are altering their year-end planning to take advantage of the deduction in its existing form. Also see: Wealthy Donors Ramp Up Giving as Fiscal Talks Continue, PND News and Advisers See Rush to Donor-Advised Funds, Wall Street Journal

Benefit Corporations: The latest edition of the Reid & Riege Nonprofit Organization Report conducts a deep dive into b-corporations exploring what they are, how they relate to traditional nonprofit organizations and the problems they pose.

Impact Investing: In the New York Times Stephanie Strom examines early results of impact bonds in the philanthropic sector finding that they are becoming increasingly common and profitable.

Nonprofit Disclosure: The New York attorney general's office has proposed regulations that will require nonprofits annually disclose the percentage of spending on "electioneering activities" and contributions. The proposal is subject to hearings and public comment through March 6. Proposed regulations text: read here. Also see: (Press Release) A.G. Schneiderman Announces New Disclosure Requirements For Nonprofits That Engage In Electioneering and N.Y. to Seek Disclosure of Nonprofits’ Political Spending, Chronicle of Philanthropy

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