White House budget cut to charitable deduction alarms philanthropists and non-profits

Gautham Nagesh
The Daily Caller
2/1/2010

The Obama administration’s fiscal 2011 budget proposes cutting the tax deduction for charitable donations, alarming both philanthropists and non-profits across the country.

The White House is expecting to collect an additional $291 billion over the next decade by reducing the write-off for families earning over $250,000 despite the fact Congress roundly rejected such a measure last year. While the administration is portraying this as a populist move, experts have said the end result will be a significant blow to charities and non-profits already reeling in the midst of the recession.

“It’s frankly surprising to see this proposal come back this year, it was very controversial last year,” said Tom Riley, vice president for communications at the Philanthropy Roundtable. “This of all times isn’t the time to take actions that would discourage charitable giving. The need for non-profits hasn’t been higher for a generation.”

Roberton Williams, a senior fellow at the Tax Policy Center said the rule change would make it about 10 percent more expensive for individuals affected to donate to charity. He estimated that would correspond to a $10 billion drop in donations out of the $300 billion Americans give annually.

“From the perspective of charities, they’re in a tough time right anyway,” Williams said. “Some charities have been seeing a drop-off in donations and charities themselves that have endowments are seeing a drop-off in return from investments. It’s a double whammy.”

Last year the Obama administration defended the move, claiming that the $100 million included in the Recovery Act for charities and non-profits would help cover the gap, along with the natural rise in donations following the economic recovery. Those arguments will be even tougher to make this year with the country still mired in double-digit unemployment and no second stimulus for charities in the works.

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