By Rob Webb
In 1913, Congress imposed the first personal income tax.
In 1917, Americans were allowed for the first time to take tax deductions for their charitable gifts.
Now, after nearly two-and-a-half years of work, debate and compromise, Congress is considering what has been characterized as “the single most important piece of charitable fundraising legislation in almost a generation” by Paulette V. Maehara, president and CEO of the Association of Fundraising Professionals.
Having won Senate approval, the Charity Aid, Recovery and Empowerment Act of 2003 (S. 476) is in the hands of the House of Representatives.
The primary giving incentive contained in both versions is the IRA rollover.
Currently, donors can roll over funds from their IRAs to charity but, by doing so, they face potentially egregious tax consequences.
By letting individuals transfer funds tax-free from an individual retirement account to a charitable organization, the provision will increase giving by several billion dollars annually.
Other charitable giving incentives contained in the bill include:
* Allowing individuals who do not itemize their tax returns to take a deduction for their charitable gifts.
* Extending the deductions for gifts of food, books and scientific and computer equipment.
* Creating incentives for contributions of property for conservation purposes.
* Enhancing the deduction for contributions of literary, musical, artistic and scholarly compositions.
* Exempting certain mileage reimbursements to volunteers from gross income.
The bill couldn’t come at a more critical time for our nation’s charities. For the first time in over 15 years, charitable giving is on the decline.
Figures show donations to nonprofits last year were actually below the previous year’s levels after adjustment for inflation.
A recent AFP study conducted found only 60 percent of U.S. charities raised as much money in 2002 as they did in 2001.
And only 57 percent of all nonprofits reached their fundraising goal.
The Chronicle of Philanthropy reported April 14 that donations to 1,400 local United Way campaigns dropped 3 percent to 4 percent in 2002-03, a decline of more that $150 million.
This situation is having a dramatic effect on local arts, education, youth, health care and social service providers. While these organizations remain committed to their causes, many are being forced to lay off staff and cut back on critical services.
Despite these cuts, most nonprofits are doing a much better job of meeting community needs than government could ever do.
Members of Congress should show bipartisan support for our nation’s charities that have helped local communities through challenging times.
Just as these nonprofits have been helping all of us, it’s time for us to help them by encouraging our representatives to support this important legislation.
Rob Webb is president and CEO of R.M. Webb and Associates, a California-based nonprofit consulting firm and a member of the City Council in Long Beach, Calif.