Will the charitable deduction feel the love this Valentine’s Day?

Since before the presidential election, and through multiple budget and tax reform discussions, the fate of the deduction for charitable contributions has hung in the balance. This Thursday, groups will line up on Capitol Hill to defend the deduction in front of the House Committee on Ways and Means.

“Public charities and private foundations perform invaluable services for our society, especially during this time of economic slowdown and high unemployment,” said Representative Dave Camp (R-MI) in a statement last week announcing the hearing. “Because of the critical role that charities play, the committee must hear directly from the charitable community before considering any proposals as part of comprehensive tax reform that might impact their ability to obtain the resources they need to fulfill their missions.”

Proposals have been made to limit the charitable deduction in recent years as part of a broader overhaul of the tax system, but this is the first time the committee will dedicate an entire hearing to formally address the issue.

“The committee is holding this hearing to allow stakeholders and members of the public the opportunity to share their perspectives on the deduction and on various proposals to modify it,” the statement said.

Examples of proposed restrictions include limiting the tax rate against which contributions can be deducted, setting a dollar cap on total itemized deductions, setting a minimum contribution level to qualify for a deduction, and replacing the deduction with a tax credit that is available whether or not a taxpayer itemizes deductions.

“We’re thankful to Chairman Camp for acknowledging the critical role that 501(c)(3) organizations play in society,” said Jim Clarke, CAE, senior vice president of public policy for ASAE. “But we remain very concerned that any changes to the charitable deduction would have an adverse impact on charitable giving and the ability of nonprofit organizations—including association foundations—to carry out their vital work. We’re hopeful that the committee will keep the health of America’s nonprofit community top-of-mind as they go through their deliberations.”

Members of the Charitable Giving Coalition, including ASAE, intend to make a strong case for protecting the charitable contribution tax deduction, said Sean Walsh, a spokesman for the coalition.

“With an economy that continues to struggle, there is a higher demand for services but fewer resources to get the job done,” he said. “Caps or limits to the charitable deduction would have profound consequences, hitting hardest those who need help the most. The nation’s budget crisis is undeniable, but that’s why nonprofits and communities need more support, not less.”

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