Nonprofits Worry Charitable Giving Will Be Hurt By New Tax Plan

Almost a year ago we predicted that nonprofits would face stricter budgets cuts and less government funding over the next few years - and sadly, it looks like we were right.

Many nonprofits are becoming increasingly worried over the President’s new budget plan that was announced early last week. President Obama’s new tax plan will limit write-offs for all itemized deductions, including those for charitable donations, to just 28%. This is a 7% decrease from the current rate of 35%. A recent article showed that many nonprofit leaders fear the extra taxes the wealthy could end up paying will deter them from giving as generously as they have done in the past. And none of us want that.

Many organizations have spoken up in opposition of the President’s plan. Sue Santa, Senior Vice President of the Philanthropy Roundtable feels the President is sending charities mixed messages. “On one hand, he wants to limit the charitable deduction. On the other, he wants millionaires to continue to give to charity while also paying higher taxes.”

Unfortunately, we can’t have it both ways.

Global nonprofit programs are also being affected by the new tax plan: while there’s a proposed increase in spending on international aid there are cuts to global-health and humanitarian-assistance programs, which could affect nonprofits that are working overseas.

With higher taxes on charitable donations and budget cuts to government funded groups, nonprofits have taken quite a hit in the past week. And given the current state of the “giving climate” it’s the last thing they need.

What do you think about the proposed tax plan? How do you think this will impact your nonprofit? The ThinkTank would love to hear from you.