Nonprofits weigh in on Obama budget

Barack Obama
Barack Obama

With President Obama’s budget blueprint in hand, nonprofits are beginning to weigh the pros and cons of the $3.55 trillion package.

Obama’s proposal to reduce the itemized-deduction rate for people making more than $250,000 a year could dampen donations to charity, Diana Aviv, president and CEO of Independent Sector, a coalition of about 600 nonprofits, says in a statement.

“Independent Sector believes that this change could be a disincentive to some donors who might further cap their gifts on account of the new limit,” she says.

The Center on Philanthropy at Indiana University says Obama’s tax-rate changes could dampen giving.

“Our estimates suggest that if these proposals had been in place in 2006, total itemized charitable giving by households would have dropped by 2.1 percent,” Patrick Rooney, the center’s interim executive director, says in a statement.

However, the effects of the recession on personal income and wealth will have a more significant negative impact on giving than will the proposed tax-rate changes, he says.

Giving USA Foundation says Obama’s tax-rate changes are unlikely to affect the way generous Americans donate.

While only about three percent of tax returns in 2006 had incomes of $200,000 or more a year, that segment donated more than 42 percent of the all itemized deductions in 2006.

But given that not all charitable gifts are listed on tax returns for deduction, some giving will not be affected.

“It is likely that when tax rates are high, at least some people will work harder to keep track of their giving and find it more worthwhile to submit the information to accountants so it shows up on returns,” Del Martin, chair of Giving USA Foundation, says in a statement.

American Forward, a coalition of 70 entrepreneurial nonprofits, applauded Obama for his proposal to create a “Social Innovation Fund.”

Part of the $1.13 billion in funding for the Corporation for National and Community Service, the fund would test new approaches to major societal challenges and help bring to proven programs.

“In communities across the country, there are innovative solutions to persistent social challenges,” Kelly Ward, director of America Forward, says in a statement. “The Social Innovation Fund would identify these solutions wherever they exist and help them grow to new communities.”

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