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Congress Debating the Value of Certain Charitable Causes

(Oct. 1, 2007) A recent congressional hearing about whether or not charities are doing enough to serve poor and diverse communities included concerns about whether contributions to certain nonprofits should be treated the same for tax and deduction purposes.

The House Ways and Means Oversight Subcommittee, which has jurisdiction over nonprofit issues, held a hearing on Tuesday, Sept. 25, to examine how charities provide support to regions with large concentrations of poor and diverse people. To help the subcommittee assess this issue, Chairman John Lewis (D-Ga.) called upon a panel composed of:

  • Julian Wolpert, Ph.D., Bryant professor of public affairs, emeritus, Woodrow Wilson School, Princeton University, Princeton, N.J.
  • Elizabeth T. Boris, Ph.D., director, Center on Nonprofits and Philanthropy, The Urban Institute, Washington, D.C.
  • Kevin M. Brown, chief operating officer, American Red Cross, Washington, D.C.
  • Susan V. Berresford, president and chief executive officer, The Ford Foundation, New York, N.Y.
  • Lesley Grady, vice president of community partnerships, The Community Foundation for Greater Atlanta
  • Byron Laher, director, government and labor relations and community affairs, Greater Twin Cities United Way, Minneapolis, Minnesota

The hearing focused on whether charitable organizations are serving diverse populations and communities, including topics such as:

  • the extent to which philanthropic dollars are being directed toward diverse communities
  • the actions tax-exempt organizations are taking to deal with issues and challenges that have arisen in identifying the needs of diverse communities
  • the partnerships between governments and charitable organizations that are needed to reach and serve diverse populations. 

Treating Contributions Differently

Much of the hearing focused on the American Red Cross’s response to Hurricane Katrina. However, a key part of the discussion also centered on the tax treatment of charitable contributions to certain charities, such as universities and museums. Several representatives expressed concerns that all contributions to charities are treated the same way for tax purposes, regardless of the mission of the charity.

“Whether certain causes or missions are more worthy than others is an issue that seems to arise from time to time,” said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP, after the hearing. “Do we need to have a discussion about how to better provide support to poor regions in the United States and around the world? Absolutely, but solutions to this issue shouldn’t come at the expense of other charities.”

Maehara further noted that the sector now tackles a stunning array of issues that are not considered traditionally “charitable” but that affect people every day: the economy, science, terrorism prevention and others. The strength of the sector comes from its diversity, according to Maehara.

Encouraging Giving to the Poor

During the hearing, several witnesses discussed ways to encourage giving to organizations that work on issues related to the poor.

Grady, vice president of the Community Foundation of Greater Atlanta, encouraged Congress to pass the Public Good Rollover Act, which would make permanent the IRA Rollover provision (allowing tax-free contributions from an individual retirement account to a charity). The Public Good Rollover Act is AFP’s key legislative priority in 2007, as the IRA Rollover provision is set to expire at the end of the year. AFP members are encouraged to contact their members of Congress and encourage them to pass the bill. More information can be found here.

In addition, the non-itemizer deduction, which would allow donors who don’t itemize their taxes to take a charitable deduction, was brought up by Laher, director of public policy at the Greater Twin Cities United Way.

AFP will continue to monitor the work of the Oversight Subcommittee regarding this issue, educate members of Congress about the work of the charitable sector and alert members if grassroots action is needed.

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