These organizations could see changes should a proposed cap to the charitable tax deduction included in President Obama’s budget plan pass.
The U.S. Senate has already passed the provision that would cap or limit itemized tax deductions — including the charitable deduction which allows donors to deduct gifts to charities. The purpose of the provision, according to those promoting it, is to redirect those vital charitable dollars to help plug the federal deficit … but it would also reduce donations by billions of dollars nationwide and cut or eliminate vital services for millions of people.
Here in Cleveland and Bradley County, that could mean services provided to thousands of needy each year would be greatly limited, and some organizations might actually have to cease operation.
At United Way of Bradley County, there are four impact areas we are addressing: education, health, self-sufficiency and supporting the most vulnerable. We cannot do that adequately without having funds available for our partners that provide services which address these areas.
If lawmakers tamper with the charitable tax deduction, we run the risk of losing our nonprofit community’s ability to provide food and shelter, prepare our children for success in school, work and life, help families become financially stable and strengthen heath care services for our most vulnerable citizens.
Americans understand the need to reduce the federal deficit, but statistics show that they also understand the need to give to help our less-fortunate neighbors. According to United Way Worldwide, 79 percent of the country believes reducing or eliminating the charitable tax deduction would have a negative impact on charities and the people they serve.
Sixty-two percent of current donors indicate they would have to reduce their contributions by a significant amount … 25 percent or more.
For every $1 a donor can deduct, research shows that the public receives approximately $3 of benefit to the people who need our help the most. No other tax provision generates that kind of positive public impact or return on investment.
As we are still reeling from the effects of the recession, we have seen an increased demand for services. It is difficult to understand why limiting or capping the charitable deduction, which in turn reduces funds available to nonprofits, is a good idea.
Though we at United Way cannot speak on behalf of other nonprofit organizations in our community, we can most assuredly say that a reduction in charitable donations to them — which could result from the passage of this legislation — would affect the way they help others.
We ask that the U.S. House and our local representatives look closely at this legislation and analyze the impact it will have. We trust them to make the right decision for the people who are dependent on these valuable charitable dollars.
(Editor’s Note: This guest “Viewpoint” has been written and submitted by Chuck Krecklow, chairman of the board of directors for United Way of Bradley County Inc. He has served in several volunteer capacities with the nonprofit organization, just a few of which include fund distribution and campaign co-chair, and as a member of the board and executive committee for many years.)