'Fiscal Cliff' Cuts Threaten Nonprofit Fundraising

As Republicans and Democrats argue over how to cut the budget and avoid the "fiscal cliff," charitable donations may be one thing pushed over the edge. Many nonprofit organization leaders are not happy with President Obama's latest proposal to allow deduction of up to 35% of charitable donations, even though this is up from his previously proposed 28% limit. Charities argue for retention of the current deduction maximum, which is tied to the top income-tax rate set to increase to 39.6% for the wealthiest taxpayers once Bush-era tax cuts expire this month. President Obama wants to sever that link and place a cap on the percentage of a donation that could be deducted. Nonprofit estimates of the negative impact on donations have been as high as $7 billion less annually. However, Obama's plan is more appealing to nonprofits than Republican proposals for a ceiling of up to $50,000 on all tax deductions, since taxpayers would max out that dollar cap on deductions for mortgage-interest payments, state and local taxes, etc. But a bigger concern is that fiscal cliff wrangling will ultimately produce some new solution with direr impact. A recent "Chronicle of Philanthropy" article summed up that fear in a quote from Tim Delaney, chief executive for the National Council of Nonprofits: "There’s a huge trap door that we all see beneath us. We’re just hoping no one pulls the lever and we all drop through it." Read the story at http://philanthropy.com/blogs/government-and-politics/nonprofits-fight-obama-call-to-curb-charitable-deduction/31475