As Congress sets its sights on tax reform, representatives of dozens of nonprofits urged members of the House Ways and Means Committee to protect the tax deduction that encourages essential charitable giving.
Dozens of nonprofit leaders representing a wide variety of industries and charitable groups asked lawmakers to protect the charitable deduction at a hearing before the House Committee on Ways and Means last week. They also urged Congress to introduce measures to encourage increased giving and to extend the deduction to more taxpayers.
“We want to ensure that whichever policies we ultimately decide to pursue are crafted in a way that makes the tax code simpler, fairer, and easier to comply with,” Rep. Dave Camp (R-MI), chairman of the committee, said in his opening statement. “In the case of the charitable community, we also want to make sure tax reform allows you to continue to meet and fulfill the mission of each of your organizations.”
Witnesses offered everything from personal stories to statistics to suggestions on how to treat the charitable deduction. The consensus from the nonprofit community was that no limit should be placed on contribution levels and that the deduction should be opened up to those who do not itemize their deductions on their tax returns.
“The charitable deduction is a crucial incentive that gets people to give, and give more generously than they otherwise would,” said Diana Aviv, president and CEO of Independent Sector. “It speaks to Congress’s commitment to encouraging this uniquely American activity. It unites people of different faiths, ideologies, and purposes and makes it possible for us to improve life in our communities and elsewhere.”
Added Andrew Watt, president and CEO of the Association of Fundraising Professionals: “Beyond the significant giving that it creates, the deduction is a symbol of the American tradition and system of philanthropy. It is a symbol of a continuing commitment to the impact and change that nonprofits create. … To change that symbol—to limit the deduction—is to alter that commitment. Especially when we know it works.”
Statistics from the United Way show that a 2.5 percent reduction in donations would mean that the organization would have to deliver services—including job training for an unemployed worker, home care for an elderly citizen, supportive housing for a single mother, or tutoring to at-risk youth—1.3 million fewer times per year.
“No personal gain or benefit is conferred to a donor by donating to charity,” said Brian Gallagher, president and CEO of United Way Worldwide. “Rather than limiting the charitable deduction, Congress should make the charitable giving incentive stronger, and perhaps even fairer.”
Tim Delaney, president of the National Council of Nonprofits, recalled a previous appeal that was made to the “super committee”—a joint select committee formed to focus on federal deficit reduction—in 2011.
“It is imperative that Congress make no changes to the charitable giving incentive that threaten the ability of nonprofit organizations to serve those most in need,” he said. “We ask that you avoid endangering the ability of nonprofits to serve your constituents and our communities by making a clear statement in support of the charitable deduction and in opposition to proposals to reduce or cap the value of deductions for charitable contributions.”
Before the hearing, Camp and Ranking Member Sandy Levin (D-MI) announced the formation of 11 separate working groups to examine different aspects of tax reform. One group has been assigned to focus on charitable and other tax-exempt organizations. After the groups’ work is completed, the Joint Committee on Taxation will prepare a report for the full Ways and Means Committee, due April 15.