The recent fiscal turmoil in Washington serves as a poignant reminder of the importance of the strength and stability of America’s charitable sector.
When political indecision halted many programs and services, nonprofits in communities across the country — once again — stepped up to help those in need. Community foundations, like ACT for Alexandria, were part of this lifeline.
As the government returns to normal and we celebrate Community Foundation Week — now through Monday — it’s important to remember the value of local foundations, and nonprofits in general. And what better time to reaffirm our support of the charitable sector and all that it means to our nation’s success.
That said, Congress is about to consider federal tax reform that could cut or limit incentives for charitable giving, specifically the charitable tax deduction. That decision will have broad ramifications; it could hurt our community and thousands of people who rely on programs and services provided by Alexandria nonprofits.
Let’s be clear. The charitable deduction is not about donors; it’s about what donors’ dollars do to aid those in need. Eliminating or reducing charitable deductions will have significant consequences for our community. Consider these:
• Nonprofits face an increased demand for services — which became more dramatic with the recession and recent government shutdown — with dwindling dollars to meet this crisis. They are asked to do more with less. ALIVE!, a local agency that provides food to struggling Alexandrians, noted a significant spike in people in need from a prerecession average of 1,600 people per month to more than 2,100 in 2011. This represents a 35-percent increase. At the same time, the cost of food has grown substantially for ALIVE!, mainly because of the decrease of free items from the U.S. Department of Agriculture food program.
• The local nonprofit sector employs more than 10,000 people, making up almost 11 percent of Alexandria’s workforce. Statewide, nonprofits employ nearly 20 times as many workers as Virginia’s utilities industry, five times as many as the information industry, and three times as many as the finance and insurance industry.
• Nationally, nonprofits — some of the largest are based in Alexandria — generate billions each year in economic activity through goods, services and wages. Nonprofits are a major economic force in our community. In Virginia, nonprofits generate nearly $1.3 billion in state and federal tax revenue.
• If the charitable tax deduction were reduced or eliminated, nonprofits would lose their ability to effectively provide food, shelter, educational support, health services and more — all vital components of a thriving community. Conservative estimates indicate that even limiting, or capping the charitable tax deduction could drastically reduce giving nationally by $5.6 billion each year. Other estimates go as high as twice that amount. Either way, dramatic reductions in charitable giving would seriously impede the ability of nonprofits that provide crucial, on-the-ground services to those most in need.
It’s clear: Millions of Americans depend on a network of highly effective, compassionate organizations that provide jobs, economic development, food, shelter, places of worship and countless other services. Nearly all depend on charitable giving for their survival.
The 2012 Giving USA report states that more than 80 percent of the nearly $229 billion in individual philanthropy came from taxpayers who itemized their charitable contributions — and receive a charitable deduction. Without this incentive, would they give? Would they give as much?
One thing is for certain: Lawmakers shouldn’t experiment with the charitable tax deduction when so much is at stake.
This article originally appeared in the Alexandria Times and has been reprinted here with the permission of the author.