Charities, Fundraisers Call New Tax Plan a “Mixed Bag”—Appreciate Simplification, Concerned About Impact on Giving
(Feb. 28, 2014) The Association of Fundraising Professionals (AFP) today expressed its appreciation to Rep. Dave Camp (R-Mich.) for recognizing the unique value of the charitable deduction in his new plan that seeks to simplify the tax code. However, AFP remains deeply concerned about provisions in his proposal that would decrease giving.
Camp, the chair of the House Ways and Means Committee, has introduced a tax proposal that would extend the date for taxpayers to make a charitable contribution and take a tax deduction for it from Dec. 31of one year to April 15 of the next. For example, donors could make a gift in March 2015 and have the deduction apply to their 2014 tax returns. By letting donors make gifts closer to the date of their tax filings, it is hoped that more people would give once they see the impact of giving on their taxes.
However, AFP is concerned about another provision that would create a two percent floor for all taxpayers who itemize their contributions. Under the provision, contributions could only be deducted if they exceeded two percent of the individual’s adjusted gross income. Such a provision is estimated to decrease giving by more than $3 billion.
In addition, the limit on the total annual charitable deductions a donor can take for contributions of cash has been reduced from 50 percent to 40 percent of a donor’s adjusted gross income. This change could affect gifts from major donors—as well as those who have received inheritances and wish to make significant contributions to a cause.
“Chairman Camp has been a strong supporter of nonprofits and philanthropy, and we are grateful for his focus on creating a tax system that works more effectively for charities and all citizens,” said Andrew Watt, FInstF, president and CEO of AFP. “We look forward to working with him and the entire Ways and Means Committee on developing and refining proposals that will encourage more giving and continue the commitment to the impact and change that nonprofits create.”
AFP has been one of the leaders in the charitable sector in educating Congress about the importance of the charitable deduction and recommending policy that encourages giving while ensuring charities are transparent and serving the public good.
“The charitable deduction is a powerful symbol of a continuing commitment to the impact and change that nonprofits create working together with individual donors, for-profit organizations, foundations, the government and many others,” said Watt. “To drastically change that symbol—to limit the deduction—is to alter that commitment. At a time when we are still recovering from the worst economic period in generations, we must continue to support traditions, like philanthropy and the charitable deduction, that have served America for so long and so well.”
For more information, or to see AFP’s written comments to the House Ways and Means Committee on the importance of philanthropy and the charitable deduction, email firstname.lastname@example.org.
Related AFP ResourcesParliament Passes Canada Not-For-Profit Corporations Act
Sen. Mercer Stakes Out Critical Need for Special Committee on Charitable Sector
Ethics panel Co-hosted by AFP’s Ethics Resources Committee and the Canadian Centre for Ethics and Corporate Governance
UPDATE: AFP Canadian Council Plans For the Future
Stumped About Fundraising Ethics? AFP Can Help You