WASHINGTON A coalition of 23 large non-profit organizations wrote a letter to Congress expressing concern that reducing or capping the value of itemized deductions for charitable contributions will hurt charities and those who need their services.
The coalition's letter, signed by the leaders of the organizations and sent to Sen. Max Baucus, D-Montana, argues that proposed caps of itemized deductions at 28 percent will result in a decrease in charitable donations. The organizations involved in the coalition include the Evangelical Council for Financial Accountability, the American Red Cross, the Association of Fundraising Professionals and United Way Worldwide.
The letter says that American charities are still hurting from the decrease in donations during the 2008-2009 recession. The Internal Revenue Service reported a drop of 20 percent in giving during those years by donors who itemize their tax returns. Though charitable donations are on the rise again, it will take an estimated five to six years to return to normal levels.
If Congress votes to decrease the value of itemized deductions for charitable giving, the non-profits will not be the only ones to suffer. The authors argue that low-income brackets, those who benefit most from charitable donations, will be the most damaged by the proposed cap. As state and federal governments have cut services due to budgetary constraints, charities have filled their place by helping those in need. If donors give less due to changes in tax incentive, charities will lack resources to meet these needs.
"Despite how the proposal looks on paper," said the letter, "wealthy Americans will not bear the brunt of a cap or reduction in the value of itemized deductionsAmerica's poor will."
The coalition also argues the merit of charitable deduction as a type of tax incentive that "encourages behavior that enriches communities rather than individual taxpayers."
The letter seeks to remind Congress that charities, as small businesses and employers, are important to the economy."To truly jumpstart the economy, the federal government should remove barriers that limit charitable giving, not construct more of them," it said.
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