May 2011:

Congress is considering legislation to cut charitable tax deduction rates or eliminate them altogether and replace it with a tax credit system.   The ramifications of this legislation could adversely impact major donor gifts to the Friends and other charitable organizations.  This comes at a particularly concerning time as donor dollars represent more than 90% of our annual operating costs and are already at risk from the softened economy.

We urge you to learn more about this matter that is being addressed now in Congress and voice your concern with our legislators in Washington D.C.

Who to Contact?

Contact information for Michigan Senators and Representatives can be found here:  Contacting Congress

To find your local U.S. House Representatives by District, enter your Zipcode here:  Find Your Rep

More information:

More detail about this issue is provided below by Diana Aviv, President of the Independent Sector, a national coalition of non-profits and foundations.  Ms. Aviv distributed this notice on May 3, 2011, to urge supporters to contact Congress about this prospective legislation.

Ms. Aviv’s note:

Dear colleague,

Over the next several weeks, there will be considerable activity in Washington, DC, on budget and tax matters that could ultimately have a significant effect on the future of the nonprofit and philanthropic sector. The charitable deduction may be at risk. We must seize this opportunity to make our voices heard in the current debate about the importance of the charitable deduction. 

What’s Happening Right Now
Prompted by anticipated negotiations with Congress to raise the debt ceiling, President Obama recently announced his intention to create a new group composed of leaders from both parties and led by Vice President Biden to reach a “final agreement on a plan to reduce the deficit and get it done by the end of June.” Among the items that the President specifically addressed in his four-part proposal to reduce the deficit was spending on itemized deductions – “from home ownership to charitable giving.” As he has in his last three budget proposals, the President again called for capping charitable and other deductions for households with incomes over $250,000 per year. The discussions are set to begin on May 5.

Adding to the urgency, a bipartisan group of Senators, the so-called “Gang of Six,” plans to introduce legislation in early May that embodies the deficit reduction proposals of the President’s Commission on Fiscal Responsibility and Reform, which issued its report last December. The commission, as you may recall, proposed eliminating the charitable deduction and replacing it with a 12 percent credit for charitable gifts that exceed 2 percent of an individual’s adjusted gross income. Very little is known about how this proposed change might affect charitable giving, and it would not be responsible to adopt this significant policy change until its effects are clearly understood.   

Why the Charitable Deduction is Important and Fair
While Americans give to charitable organizations for many reasons, studies have shown that tax policy greatly shapes the size and number of charitable donations¹. It has been estimated that, with no deduction for charitable gifts, annual giving would drop by between 25 and 36 percent², and the proposed cap could cost charities as much as $7 billion a year in contributions³.

The charitable deduction is a way to enrich communities, not individual taxpayers. Unlike other tax deductions that subsidize personal expenditures, the charitable deduction provides an incentive for people to give money away to benefit others.

Independent Sector has created a one-pager on the charitable deduction that we encourage you to use in your conversations with Hill and Administration staff, as well as your own members, affiliates, and stakeholders.

What You Can Do
1. Please contact the members of Congress with whom you have relationships and/or who represent your organization and the people you serve. Ask them to protect the charitable deduction as a fair and important incentive for charitable giving. Let them know that your organization depends on the charitable gifts that this tax incentive generates. Congress is currently completing its spring district work period, which may provide an opportunity to speak with your representatives while they are at home.

2. If you have relationships with any of the members of Congress who are involved in the current negotiations or the development of legislative proposals, it is especially important that you contact them now. Their names (linked to their contact pages) are listed below.

This article from the Minneapolis Star & Tribune provides further perspective on the issue and shares insight on how it may affect you.   Charitable Tax Break Becomes Target