9/23/2013 — Charitable Giving – It’s A Lifeline for Thriving Communities

By The Charitable Giving Coalition

Welcome to the inaugural post of the Charitable Giving Coalition’s Protect Giving Blog! This fall lawmakers head into an intense period of debate to address critical issues, from deficit reduction to tax reform. Through this blog, we’ll explore the vital role nonprofits play in our communities. They are a lifeline – employing millions, providing vital services and contributing to local economic growth.

Now more than ever, nonprofits rely on private donations as government funding declines and the demand for support services increases. An economic recovery with staying power requires a strong nonprofit sector that provides one out of ten jobs, support for the most vulnerable and fuels education and health care.  

Proposals to tamper with the charitable tax deduction would set off a cascade  of consequences that would undermine the economy. Elected leaders would be wise to remember this dangerous game of Jenga as they search for ways to reduce the deficit. 

In the first of a two-part series, we’ll explore some of the key reasons why the charitable deduction is so important to our communities. What other reasons can you think of to protect the charitable deduction?

The charitable deduction advances the public good.

The charitable deduction has proven to be extraordinarily effective at empowering the private sector to serve the public good. It enhances the ability of individuals and businesses to help neighbors in need, as well as to create, fund and operate the institutions that make up the fabric of our civil society.

Studies show that any cutback in the charitable deduction would hurt our communities, hitting hardest those who need support the most. If Congress takes away or harms the deduction, we put at risk billions of dollars in private donations that have supported diverse, worthy causes.

The charitable deduction helps drive our economy and strengthen our communities.

Charitable giving fueled by the deduction creates a vibrant and economically vital charitable sector. Consider the following economic benefits:

  • Nonprofits generate $1.1 trillion every year in the form of jobs and services.
  • The sector employs one in 10 U.S. workers, providing roughly 13.7 million jobs.
  • Employees of nonprofit organizations receive roughly nine percent of all wages paid in the U.S., totaling $587.7 billion.

The charitable deduction is unique—and it works.

The charitable deduction is different than other itemized deductions because it encourages individuals to give back a portion of their income to their communities. And consider the collective impact of giving.  A calculation of the charitable deduction indicates that for every $1 a donor can deduct for his or her donation, the public receives approximately $3 of benefit. What other tax provision generates that kind of positive public impact?

Charities and nonprofits aid the most vulnerable, educate, heal, nurture and innovate – often in ways that government and the private sector cannot.

The charitable sector remains the laboratory of new ideas and innovation for social policy issues. Monies from the philanthropic sector are more flexible and nimble, since private support is generally less bureaucratic. Moreover, it can be leveraged. And it can be grown. The raw potential of philanthropic giving is as indisputable as its current impact. Without such private support, governments and taxpayers will be called upon to operate and pay for the programs maintained by America’s charities.

As one member of Congress confided to a Coalition member: “We can’t do what you do—and we shouldn’t try. We’ll totally mess it up. If the government tried to take over what [nonprofits] do, in no time it would be twice as expensive and half as effective.”

Charitable giving is not about the donors – it’s about what their donations do to support thriving communities and people in need.

To be clear – the charitable deduction is not about the donors. It’s about what donors’ dollars do to aid the most vulnerable, educate, heal, nurture and innovate–often in ways that government and the private sector cannot. Do we really want to live in a society that penalizes a person who may gain personal reward by benefiting others?

 The charitable deduction receives overwhelming public support.

A recent United Way Worldwide survey found that nearly 80 percent of Americans believe that reducing or eliminating the charitable tax deduction would have a negative impact on charities and the people they serve.

  • Two thirds of Americans (67/69 percent) are opposed to reducing the charitable tax deduction.
  • According to a January 2013 national survey, 75 percent of Americans say they value the deduction as it currently stands.
  • Sixty-one percent say that they feel strongly about maintaining the current deduction, up from 56 percent in January 2012.

To read the second part of our series on why the charitable deduction is so important to thriving communities, click here.