Obama, Congress consider cutting deductions for donations to charities, churches

Published: Tuesday, Oct. 18 2011 9:00 a.m. MDT

Ruth Hunsaker of Salt Lake City sits as she rings a bell and waits for donations at Shopko on 1300 East and 2290 South in Salt Lake City, Utah, Dec. 10, 2004.

Ravell Call, Deseret News

Last year, United Way changed 52 million lives.

Each one had different needs. Some people needed a place to sleep, some needed to see a doctor and some needed help finding a job. But all those needs were met in the same way: through the generosity of good-hearted Americans.

Tuesday, United Way leadership stood before a Senate Finance Committee to plead for those people. Under pressure to deal with the burgeoning national deficit, Congress has been considering more than a dozen different proposals to reduce or do away with tax deductions for donations to charity. If the government eliminates tax breaks for charitable contributions — the lifeblood of organizations like United Way — many worry donors will give less and needy people will go without. Under the most notable proposal, President Barack Obama's 2012 budget, estimates are that charitable gifts could drop by as much as $5.6 billion.

Talk of axing the tax write-off incentive couldn't come at a worse time for the less fortunate. Need increased during the recession while donations to charities floundered. In the meantime, with government social programs on the chopping block, the nonprofit sector is under pressure to pick up the slack.

"It's a triple whammy for those trying to help the poor," said Kirsten Gronbjerg, Efroymson Chair at the Center on Philanthropy at Indiana University. "Government programs are losing funding. The recession is still swinging, unemployment is still high and, even with a tax incentive, charitable contributions are hard to come by."

Elder Dallin H. Oaks of the Quorum of the Twelve of The Church of Jesus of Christ of Latter-day Saints also testified before the Senate Finance Committee, asking the senators to maintain the deductions for charitable donations because they are "vital to the private sector that is unique to America." He was joined by a professor of ethics from a Southern Baptist seminary and experts from the Congressional Budget Office and the Urban Institute. U.S. Senator Orrin Hatch, R-Utah, ranking member of the Senate Finance Committee, put together the lineup of speakers.

"Americans in crisis are turning for help in ever greater numbers to churches, charities, shelters and other social welfare groups," Hatch said. "We should make no bones about it. The changes being discussed today are radical ones. There has been a charitable deduction in the tax code for nearly a century and the proposals on the table would undo it."

Caring for America's poor

More than 1.5 million nonprofit organizations operate in the United States, according to the National Center for Charitable Statistics. In addition to feeding the hungry, clothing the naked and sheltering the homeless, nonprofits shoulder considerable responsibility for providing education, health care and access to the arts, Gronbjerg said. A majority of Americans — 70 percent — say they trust nonprofits to solve social problems more than they trust the government, according to American Express's annual survey "Perspective on Nonprofits."

To run their daily operations, nonprofits count on an estimated $300 billion in private charitable contributions, according to the Independent Sector, the nation's leading coalition of non profits and corporate giving programs. Seventy-five percent of those donations come from individual donors. Seventy percent come from people who claim charitable deductions.

"Americans have always valued these traditions of volunteerism, philanthropy and community," said Senator Max Baucus, D-Mont., chairman of the Senate Finance Committee. "For these reasons, the charitable deduction and nonprofit exemption were incorporated into our tax code. Today's nonprofit organizations help to carry on these values. Their work helps improve all of our communities."

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