Dec 12, 2013
CALL TO ACTION: Deadline Approaching for Signatories of Wyden/Thune Letter
Contact Senators and Urge Them to Sign Letter
Senators Ron Wyden (D-OR) and John Thune (R-SD) – both members of the Senate Finance Committee that oversees tax policy – recently authored a letter to fellow congressional members urging them to support protecting the “full value” of the charitable deduction. The deadline for other Senators to sign-on to this letter is this Friday, December 13. Congress needs to send a clear message concerning the importance of protecting charitable giving, so we cannot afford to pass up this bipartisan opportunity. We encourage everybody to contact the staff members of your Senators responsible for this issue and urge them to encourage their boss to join Senators Wyden and Thune by signing this letter. For the appropriate staffer, please contact William Coughlin at (202) 621-1857.
To make this effort as simple as possible, we have crafted a template email below to send to these influential members of staff:
As you may know, on November 20th over 200 nonprofit leaders were in town as part of the Charitable Giving Coalition’s annual “Protect Giving Day” event. The Alliance for Charitable Reform (ACR) is a part of this Coalition, which is a group of over 60 diverse nonprofit organizations united over the need to protect the charitable deduction from any cuts, caps, or limits.
During the day we conducted over 160 meetings on Capitol Hill with both Members and staff, warning them of the harmful effects of limiting the deduction. In our Senate meetings we also circulated the attached “Dear Colleague” letter from Senators Wyden and Thune that asks Finance Committee Chairman Baucus and Ranking Member Hatch to protect “the full value and scope of the charitable deduction during a comprehensive rewrite of the tax code.”
Even though the prospects for tax reform this year are dim, we hope your boss will use this opportunity to voice their support for this critical provision that is a lifeline for those Americans most in need.
Wyden: Charitable Deduction a Lifeline, Not a Loophole
Portland news station KATU reports on Senator Ron Wyden’s (D-OR) effort with Senator John Thune (R-SD) to preserve the full value and scope of the charitable deduction.
Howard Husock on AEI Study and Independent Philanthropy
Howard Husock, vice president for policy research at the Manhattan Institute, is the latest featured guest in our Free to Give series. In this interview, Husock discusses the newly-released study from the American Enterprise Institute on charitable giving; the charitable deduction; independent philanthropy representing our democratic ideals; and the roles government and independent philanthropy play in our civil society.
Further Evidence Giving Impacted By Charitable Deduction
Charities Will Lose $9.4 Billion if Charitable Deduction is Capped According to AEI Study
WASHINGTON, D.C.— A 28 percent cap on the charitable deduction will reduce charitable giving by $9.4 billion in one year alone, according to research discussed today at a public event by the American Enterprise Institute (AEI). The study is another confirmation that any limitation of the charitable deduction would have significant repercussions on giving.
“The charitable deduction has a direct impact on charitable giving and the findings in this study further substantiate that fact,” Sandra Swirski, executive director of the Alliance for Charitable Reform (ACR), said. “As this evidence continues to mount, we encourage all lawmakers to preserve the full scope and value of the charitable deduction.”
“The proposed charitable deduction cap will have something between a moderate and a catastrophic effect on nonprofits depending on where they sit in the sector,” Arthur Brooks, president of AEI, said at today’s event.
In addition to studying a cap on the charitable deduction, Brooks also presented findings on the effect the “Great Recession” and the tax increases implemented in January 2013 have had on charitable giving. The findings of the study were also discussed by a panel that featured:
- Alex Brill, research fellow at AEI
- Scott Hodge, president at Tax Foundation
- Howard Husock, vice president for policy research at the Manhattan Institute
- Robert McClelland, senior analyst at the Congressional Budget Office
Today was the first public event of AEI’s Philanthropic Freedom Project, an initiative dedicated to studying philanthropy and the policies that affect it. In advance of today’s public event, Brooks also previewed some of the findings of his study last month in an interview with ACR as well as during a panel discussion at the Charitable Giving Coalition’s Protect Giving Day.
ACR, a project of The Philanthropy Roundtable comprised of nonprofit leaders and groups, serves as a leading voice on supporting legislative proposals that encourage the growth of private giving.
’Tis better to give, but some give more
By Jeff Jacoby
When it comes to charitable giving, America is a world-beater. According to Giving USA, an annual compendium of national data on philanthropy, Americans last year donated more than $316 billion to charity, or roughly 2 percent of GDP. Contrary to popular belief, most of that money didn’t come from foundations or corporations. It came from individuals. In 2012, donations from private American households added up to about $223 billion.
Whether measured per capita or as a share of national wealth, charity in other countries doesn’t come close. The extraordinary generosity of ordinary Americans has often been noted. Arthur Brooks, president of the American Enterprise Institute, calls it the nation’s most salient feature. “The truly extraordinary thing about the United States is not how much we produce . . . nor how much we consume,” Brooks wrote in “Who Really Cares,” his eye-opening 2006 book on the charitable habits of Americans. “Rather, it is how much we give. America is a land of charity.”
That’s in the aggregate, the view from 35,000 feet. Seen as a whole, Americans are indeed charitable standouts. Not even Canada, so similar to the United States geographically and culturally, shows the same commitment. “Private monetary generosity in Canada is considerably lower than in the United States,” noted the Fraser Institute, a leading Canadian think tank, in a report last December. “This generosity gap undoubtedly limits the ability of charities to improve the quality of life in Canada.”
But not all Americans donate. There are generosity gaps here too. Writing recently in Philanthropy magazine (the quarterly journal of the Philanthropy Roundtable), Karl Zinsmeister usefully surveys the scholarly research.
American generosity varies by region. Studies by Fraser and the Catalogue of Philanthropy, which use IRS data from itemized tax returns, show a consistent pattern. “Measured by how much they share out of what they have available, the most generous Americans are not generally those in high-income, urban, liberal states like California or Massachusetts,” Zinsmeister writes. “Rather, people living in areas that are more rural, conservative, religious, and moderate in income are our most generous givers.”
Similar findings come from studies not based on IRS figures. The Panel Study of Income Dynamics, a detailed survey of households that has been collecting data continuously since 1968, shows that Americans living in the Mountain States give more than twice as much of their income to charity as residents of New England and the Mid-Atlantic.
A report last year by the Chronicle of Philanthropy adjusted the data to account for differences in the cost of living. Even with allowances for the higher bite taken by housing, food, health care, and taxes, residents of the Northeast gave less of their discretionary income to charity than Americans elsewhere. “Red states are more generous than blue states,” the chronicle concluded.
So are states and cities where church attendance is strongest. In the Southern “Bible Belt” and areas with large Mormon populations, residents routinely give away more of what they earn. Where religious practice is weakest, charitable giving — even to secular causes — dwindles. No wonder New England is a laggard.
And yet, New Englanders do know how to give. The same survey that ranks Maine, Massachusetts, Connecticut, New Hampshire, Vermont, and Rhode Island dead last in percentage of income donated to charity also ranks them first in charitable participation — the percentage of residents who donated some amount. “New Englanders reflect, and indeed may lead, the extraordinary American propensity to donate to others,” Zinsmeister points out. “They just don’t give as much as residents of other regions.”
Discussions of charity — who gives, who doesn’t — invariably become fodder for the culture wars. Let’s face it, an unmistakable aroma of hypocrisy wafts when those who preach a politics of compassion and denounce the greed of their ideological opponents turn out to be bleeding-heart tightwads.
But making a political point will never feel as good as making a charitable gift. And there is no better retort to a charge of stinginess than an act of generosity. When it comes to charitable giving, America is a world-beater. So be an American, and give.
This article originally appeared in The Boston Globe and has been reprinted here with the permission of the author.
Protect Giving Day 2013
Washington, DC—Protect Giving Day, organized by the Charitable Giving Coalition, was held on Capitol Hill on November 20th. ACR joined over 200 charitable sector leaders from 140 nonprofit organizations to encourage lawmakers to protect the charitable deduction.
Thune-Wyden Letter Called Game Changer In Fight to Save Charitable Deduction
By Diane Freda
Reproduced with permission from Daily Tax Report, 225 DTR G-6 (Nov. 21, 2013).
Copyright 2013 by The Bureau of National Affairs, Inc.
Opponents of President Barack Obama’s proposed 28 percent cap on charitable deductions believe they got a big shot in the arm when Sens. John Thune (R-SD) and Ron Wyden (D-OR) signed a letter to the leaders of the Senate Finance Committee urging them to protect the charitable deduction.
The charitable deduction has been lumped with 10 other deductions, such as the mortgage deduction, on a list of tax expenditures that could be on the chopping block when lawmakers get down to rewriting the tax code and reducing the deficit.
Charitable sector leaders gathered in Washington Nov. 20 to meet with members of Congress and warn them about the harmful effects of limiting the deduction. In his fiscal year 2013 budget, Obama proposed putting a 28 percent cap on itemized deductions for the wealthiest Americans, including the charitable deduction.
Charity leaders pointed in particular to the unequivocal language in the letter. It called for protecting “the full value and scope of the charitable deduction” during a comprehensive rewrite of the tax code.
“The Thune-Wyden letter is a game-changer for the Senate,” Steven Taylor, United Way Worldwide senior vice president and counsel for public policy, told Bloomberg BNA Nov. 20. “We have been trying to get something like this for a long time. We get a lot of folks in Congress who say they are with us in private meetings, who say they support charities and they support the deduction, but having something like this in writing that is public really shifts the debate dramatically.”
Supporters of the deduction will be gathering signatures through Dec. 12.
In their Nov. 19 letter, Thune and Wyden carved the charitable deduction out from other tax expenditures that might be eliminated. “It is the only provision that encourages taxpayers to give away a portion of their income for the benefit of others. For this reason, it is not a loophole, but a lifeline for millions of Americans in need.” Their letter went to Senate Finance Committee Chairman Max Baucus (D-MT) and ranking member Sen. Orrin Hatch (R-UT).
In 2012, Americans donated more than $300 billion to charitable organizations and itemized giving accounted for nearly $229 billion, according to the foundation Giving USA. Keeping the deduction intact is also a jobs issue, the letter said. The organizations that received those donations leveraged their contributions through volunteers and other in-kind aid to generate $1.1 trillion in jobs and services, employing nearly 10 percent of the U.S. workforce.
$9 Billion Drop in Giving
The meetings with lawmakers dovetailed with a Washington briefing on proposals to limit the deduction.
American Enterprise Institute President Arthur Brooks, speaking on a panel of experts, said Obama’s proposed 28 percent cap would drop giving by $9 billion in the first year alone. Capping the deduction would lower the incentive for people who earn a lot and give a lot away, he said.
Previewing findings from his upcoming research paper on the Great Depression’s effects on charitable giving, Brooks also said the U.S.‘s economic slowdown has taken a toll on charitable contributions. Charitable giving declined sharply after 2007 and still hasn’t fully recovered, he said. “Wall Street may be doing well, but America’s nonprofits are still hurting,” he said.
Eugene Steuerle, Urban Institute fellow, said some of the debate about what to do about the charitable deduction in recent years has revolved around the charitable sector’s relationship to the government. Though some might argue that the subsidy isn’t being well spent, Steuerle said in reality it is cheap, because the charitable deduction only represents 2 percent of the money the government spends on social welfare functions. The government spends far more providing social welfare funding directly to charities in the form of grants, he said. Therefore, he said, it makes sense to have both—the government providing charitable services and charities providing them as well.
“You want some decisions to be made through the democratic process, and you want some subsidies where individuals are given the decision-making over how to allocate subsidies. There’s a necessary and fruitful adversarial role in pushing the government to do things,” he said. That is one of the great values of the charitable deduction.”
$9-Billion in Gifts at Risk if Deduction Is Reduced, Study Forecasts
By Alex Daniels
As nonprofits begin a new round of lobbying against President Obama’s longstanding efforts to limit the value of the charitable deduction, the American Enterprise Institute estimates that such a move would prompt donors to withhold more than $9-billion in gifts a year—a higher amount than previous studies have found.
That reduction would cause “massive” harm to the nonprofit world, Arthur Brooks, president of the conservative think tank and author of the study, told about 200 nonprofit leaders on Capitol Hill Wednesday. Mr. Brooks was there to press lawmakers to protect the favorable tax treatment of charitable gifts.
Throughout his presidency, President Obama has proposed limiting the tax savings that high earners can get for their itemized deductions, including those for charitable gifts, to 28 percent—down from the current maximum of 39.6 percent.
If Congress agreed to the 28-percent limit, donations would fall 4.4 percent, or $9.4-billion, Mr. Brooks predicted.
The biggest decline, he said, would come from the top 1 percent of earners, who would cut contributions by an estimated 24 percent. That is because virtually all of those taxpayers itemize their deductions and they would lose much of their tax incentive to give.
“You put those things together, and you’ll see a big bite out of the philanthropic economy,” he says.
Mr. Obama argues that the current tax system is unfair because wealthier people get a bigger tax break for giving than lower-income people do and that revenues are needed to temper spending cuts to programs that nonprofits care about.
The American Enterprise Institute estimate is larger than in previous studies. For example, a 2011 Tax Policy Center analysis estimated that gifts would fall by $1.7-billion to $3.2-billion a year under Mr. Obama’s proposal, while a study by Indiana University’s Center on Philanthropy that year said giving would have fallen by $3.2 billion over 2010 and 2011 combined if the 28-percent limit had been effect.
In each case, the findings represent a small slice of total donations; living Americans contributed $229-billion to charity last year, according to Giving USA, an annual tally of donations produced by the Indiana center.
The studies differ in their results because they are examining different circumstances.
For example, the Tax Policy Center did its study when the top tax bracket was 35 percent. That bracket was raised last year to 39.6 percent for individuals with taxable incomes over $400,000. Because the charitable deduction is tied to a donor’s tax bracket, the wealthiest donors now save $39.60 for every $100 donation, but savings would fall to $28 under Mr. Obama’s plan.
Mr. Brooks presented the study’s preliminary findings at a briefing organized by the Charitable Giving Coalition, a 60-member group of charities and foundations.
They are trying to get Congress to keep charities in mind between now and December 13, a deadline for a House-Senate committee to agree to a fiscal 2014 federal budget plan. Nonprofits are vulnerable, they say, because lowering the deduction could be seen as a way to raise revenues during those talks and again in January when legislation to finance the government temporarily expires.
The group received support from two lawmakers, Sen. Jim Thune, a South Dakota Republican, and Sen. Ron Wyden, an Oregon Democrat, who on Wednesday began circulating a letter to colleagues asking them to block changes in current policy.
Longer term, the charitable tax deduction is among a slew of tax breaks that are under scrutiny as Congressional leaders consider broad changes in tax policy. In an effort to streamline the tax code and raise more federal revenue, key House and Senate lawmakers have said that every tax break is on the table.
The prospects for a tax overhaul this year are slim, but Charitable Giving Coalition members worry that as lawmakers consider changes, cutting the value of the charitable deduction will survive as a “template” for future deliberations.
But Michael King, president of Volunteers of America, said he’s optimistic that the charities are getting through to lawmakers. People have stopped lumping us in with the mortgage tax deduction,” he says. “You can see the education that’s been made on this issue.”
This article originally appeared in The Chronicle of Philanthropy and has been reprinted here with the permission of the author.
Nov 22, 2013
President Kennedy on Charitable Giving
The raising of extraordinarily large sums of money, given voluntarily and freely by millions of our fellow Americans, is a unique American tradition… Philanthropy, charity, giving voluntarily and freely… call it what you like, but it is truly a jewel of an American tradition.
—John F. Kennedy
MEDIA ADVISORY: Charitable Deduction Wins Key Bipartisan Senate Support
Key Congressional Leaders Urge Fellow Lawmakers to Preserve Charitable Deduction As Hundreds From Sector Gather in D.C.
WASHINGTON, D.C. – The charitable deduction won strong bipartisan support today from key Senate leaders as more than 200 frontline representatives from the nonprofit and charitable sectors gathered in Washington, D.C. to warn that any limitations to the charitable tax deduction would have cascading consequences.
Sens. John Thune (R-SD) and Ron Wyden (D-OR) – both members of the Senate Finance Committee that oversees tax policy – sent a letter [PDF] to Sens. Max Baucus (D- MT) and Orrin Hatch (R-UT), chair and ranking member of the committee, urging them to protect the current charitable deduction. As lawmakers head into an intense period of debate over tax reform and deficit reduction, the letter underscores growing bipartisan congressional support for the nearly 100-year-old tax incentive that encourages charitable giving. The letter is being circulated for additional signatures from other members.
“We write to you to underscore the importance of protecting the full value and scope of the charitable deduction during a comprehensive rewrite of the tax code,” Sens. Thune and Wyden said in the letter. “Analysis has repeatedly shown that proposals to cut, cap, or limit the charitable deduction could cause charitable donations to decline by billions of dollars annually. Worse yet, weakening the charitable deduction would most hurt the adults and children who receive vital charitable services from organizations like soup kitchens, after-school programs, and medical research projects, just to name a few.
“In many cases, the government would be required to step in and fund those services now being provided through private generosity,” the letter continued. “Accordingly, preserving the charitable deduction is also prudent as a matter of broader fiscal policy. We believe the federal government must affirm its long-standing dedication to encouraging private acts of charity and compassion, especially when our charities and the people they serve are facing so many challenges.”
The coalition is encouraged by the senators’ emphasis on the fact that the charitable deduction is not about the donors, but what donors’ dollars do to support worthy causes in America’s communities. The statement of support represents an important reframing of the issue to reflect the value and impact of the charitable deduction outside the beltway.
“America has a remarkable tradition of giving back. It is a reflection of our society’s values”, said Father Larry Snyder, president of Catholic Charities USA. “Our communities need policies that help encourage charitable giving, not discourage support of our neighbors in need.”
Members of the Charitable Giving Coalition – a group of more than 60 nonprofits, foundations and other charitable organizations serving every state in the country – met with nearly 150 congressional offices throughout the day to share their perspectives about the role and impact of the charitable sector in communities every day.
“We applaud Senators Thune and Wyden for their recognition of the central role of private charitable giving in strengthening our civil society and for their willingness to be catalysts for public, bipartisan support for the charitable deduction,” said Adam Meyerson, president of The Philanthropy Roundtable.
The Coalition represents a growing chorus of people from throughout America delivering a clear message to lawmakers – “I am the charitable deduction” – to make sure they understand the inextricable link between charitable giving and thriving communities, in part through a new Protect Giving YouTube channel and petition drive. Charity and foundation leaders are also sharing with lawmakers an infographic illustrating the ripple effects of the charitable sector throughout communities
While today’s action by Thune and Wyden is an important milestone, the fight to protect the charitable deduction is far from over as federal lawmakers search for revenue in the tax reform process. It is essential that they clearly understand the negative consequences of any changes to the charitable deduction, Coalition members told lawmakers. ¬Any limits on the charitable deduction would have devastating impacts on giving and communities. When giving goes down, jobs are lost, disease research stymied, economic development stunted, support services for the most vulnerable eliminated, and education, arts and recreation opportunities diminished, they said.
“Limiting the value of the charitable deduction would hobble the capacity of charities to provide assistance to families and individuals in need,” said Stacy D. Stewart, U.S. president of United Way Worldwide. “Reductions in charitable services would come as federal and state governments continue to cut funding for social programs, and would amount to a double hit to children and families in need.”
“Government cutbacks are already hurting our nation’s most vulnerable communities. To couple them with a reduction in charitable funding would be devastating,” said Vikki Spruill, president and CEO of the Council on Foundations.
At a congressional staff lunch briefing with Coalition leaders and tax policy experts, new research was shared from an upcoming report about the recession’s impact on charitable giving and the potential impact of limits to the charitable deduction. Arthur Brooks, Ph.D, president of the American Enterprise Institute, said that charitable giving stands at pre-recession levels and may not grow again strongly for several years. Also, the proposed 28 percent cap on the charitable deduction could cause giving to decline by nearly $10 billion in the first year.
The Charitable Giving Coalition
Representing private and community foundations, their grantees and independent charities, the Charitable Giving Coalition’s members include United Way Worldwide, the Salvation Army, Catholic Charities USA, the American Council on Education, Jewish Federations of North America, the American Institute for Cancer Research, the Association of Fundraising Professionals, Independent Sector, the Council on Foundations, and The Philanthropy Roundtable, among others. Formed in 2009, the coalition is a broad cross-section of nonprofit organizations across the country, including both the nonprofit organizations themselves and the associations and umbrella groups that serve their needs. The coalition is dedicated to preserving the charitable giving incentive that ensures that our nation’s charities receive the funds necessary to fulfill their essential philanthropic missions. The coalition provides a unique and unified voice on Capitol Hill on issues affecting the charitable deduction, a voice composed of both direct lobbying and robust grassroots advocacy. www.protectgiving.org, #protectgiving, @protectgiving