Charity leaders met in Washington this week to save their services from being thrown over the proverbial fiscal cliff.
Nonprofits spent Wednesday this week lobbying Congress in an effort to fight a potential cap on charitable deductions, which could save the government some $50 billion a year in tax breaks, according to the New York Times.
The galvanized effort among nonprofits during Congress' deficit-reduction negotiations is unprecedented, sector leaders said.
“Normally, every nonprofit is focused on its own particular mission, whether saving the environment, or helping children, or imbuing a greater appreciation for art,” Diana Aviv, the CEO of Independent Sector, told the New York Times. “For the first time, I’ve seen the sector coming together. We’re like Rip Van Winkle waking up and saying, This is not O.K.!”
Philanthropy News Digest points out that decreasing the charitable deduction could potentially deter giving by anywhere from .4 percent to 2.3 percent -- up to $7 billion a year.
President Obama warned this week that Republican tax proposals, which wouldn't raise rates, would threaten services for the needy, which benefit from donors who receive charitable deductions. Obama has stated that averting the “fiscal cliff” won't be possible without increases in tax rates, Reuters reports.
"If you eliminated charitable deductions, that means every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse," Obama said.
The White House has long backed reducing charitable-giving deduction limits from 35 percent to 28 percent for individuals earning more than $200,000 and married couples earning more than $250,000.
The White House invited nonprofit leaders this week to the White House to support tax increases on the wealthy, The Chronicle of Philanthropy reports.
This is a slippery slope for the sector since end-of-year giving is in full swing and donors are looking to reap the benefits of a tax break.
"If nonprofit leaders don't want changes to the charitable deduction, it is imperative that we get behind the president's call for higher tax rates on the wealthy. The majority of nonprofits know this is true, and I urge the hundreds of nonprofit leaders who have traveled to our nation's capital for visits with members of Congress today to clearly advocate for higher tax rates on the wealthy in addition to their advocacy in opposition to any changes to the charitable deduction."
Others in the nonprofit sector say they simply want clarity.
"The President is sending mixed messages to the charitable community," Sue Santa, senior vice president of the Philanthropy Roundtable, said in a release. "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."