As lawmakers in Washington, D.C., work to reform America’s tax code and address our fiscal crisis, America’s charitable sector faces an urgent threat. Congress is considering limits on the charitable tax deduction: a dangerous game that would devastate the nonprofit sector millions rely on for jobs, support and services.
Harmful changes would set off consequences undermining our economy, hitting hardest those who need the most help, shifting more of the responsibility to government to provide vital services and putting at risk billions in private donations that support diverse, worthy causes.
A lasting economic recovery requires a strong charitable sector. The philanthropic sector’s role as a safety net and innovator is more important than ever. Charities rely significantly – and in many cases entirely – on private donations, particularly now as government funding declines and the demand for social services increases.
Charitable giving – and the charitable deduction – represents a lifeline to individuals and communities in need, generating more than $1 trillion every year in the form of jobs and services. One in 10 Americans works for a nonprofit organization, accounting for about 13.7 million jobs receiving about 9 percent of wages paid in the U.S.
Charitable giving’s impact cannot be replicated by government or the private sector. The charitable deduction protects our freedom to create, fund and operate the institutions that make up the fabric of our civil society. Consider what philanthropic support has made possible:
Technology and medications to improve our health, like insulin, the polio vaccine, the MRI, electron microscope and pacemaker.
Educational opportunities such as scholarships and after-school programs.
Access to health services, such as mobile health vans and training programs.
Housing and shelter for the homeless, the abused and the addicted.
Arts and cultural activities that inform and inspire.
Protection of the environment, from land conservation to sustainability efforts.
Civil and voting rights.
Preservation of historic treasures, from museums to historic sites.
The charitable deduction works like nothing else. The charitable deduction is different than other itemized deductions. It encourages people to give a portion of their income to help people in need and support worthy causes. It encourages Americans to make charitable contributions – more often and in larger amounts – than they might otherwise do.
According to Giving USA, those who itemized their charitable contributions were responsible for 81 percent of total estimated giving (nearly $229 billion) by individuals in 2012. For every dollar a donor gets in tax relief for his or her donation, the public typically receives three dollars of benefit. It’s unlikely government could find a more effective way to leverage private investment in community services.
Americans support the charitable deduction, because it works. For nearly 100 years, the charitable deduction has served as the bedrock of our altruistic society and is a model for the world. It must continue as a fundamental tenet of our income tax system.
The nonprofit sector represents a vital infrastructure that should not be taken for granted.
Briggen Wrinkle is the executive director of the Community Foundation serving Southwest Colorado. She can be reached at Briggen@SWCommunityFoundation.org.
