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Will Obama's Plan Hurt Charities?

March 5, 2009 RSS Feed Print

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When President Obama announced his proposal to reduce the amount that taxpayers can deduct for charitable donations (for those earning over $250,000 a year, the deduction rate would go from 33 or 35 percent to 28 percent), charities protested that they would suffer from decreased giving.

But a new survey conducted for Bank of America by the Center on Philanthropy at Indiana University finds that most donors won't let that kind of change stop them from being generous. Even if they received zero deductions -- and Obama's proposal would only reduce the deduction rate -- 52 percent of wealthy households said their contributions would not change. Only one in ten said that their contributions would "dramatically decrease" if they were able to take no deductions.

As for potential increases to the estate tax, the survey against found that most wealthy people -- 54 percent - -would not change their donations if their estates were not taxed. In other words, it seems that most people do not base much of their giving decisions on their tax liabilities.

But charities still have plenty to worry about. Giving typically declines during recessions as corporate and individual donors tighten their belts. Wealthy donors, which were the focus of this survey, are responsible for 65 to 70 percent of all individual giving, so their choices can have a big impact. The survey found that donors often stop giving to organizations because they no longer feel connected to it, they decided to support other causes, or they felt they were being asked for money too often.

A charity intent on raising more money might want to encourage wealthy donors to volunteer their time, as well. The survey found that those who volunteered time tended to give more money. Those who volunteered between one and 50 hours gave an average of $45,318, while those who volunteered over 200 hours gave an average of $132,315.

For more, read "Three Ways to Give Thanks Through Charity."

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THe two comments above are obviously NOT from the givers, but, from the receivers. I agree that everyone will be tightening their belts, but, just like everyone, the non-profits are going to have to look at their spending practices and see where cutbacks can be made.
During the "growth periods", non-profits may receive more money, and, as a result, "spend more" on non-"immediate-need" products and services. We are all required to look at our spending practices right now. It is, in the end, going to be good for our country stop the extravagant, unthoughtful spending and take a closer look at where our money is going. The non-profits that have not been frugal and reaponsible, may take a hit. The others, may be rewarded, in the end.
Just some thoughts....

barb of WI 1:26PM March 29, 2009

...but only watchful waiting will reveal the answer.
I am Director of Development for a nonprofit microlending agency which has an excellent track record for yielding results and performing our mission. Few nonprofit organizations have the ability to demonstrate as quantitatively as we can the relationship between funds raised (via grants and donations) and the ROI gained as our client micro-entrepreneurs create small business enterprises and thereby, generate revenue in their communities, prevent their families from "going on the dole," and generate well-received products and services. They repay their loans and even more impressively, many return to donate their time and money to help newbie entrepreneurs.
Despite an unquestionable ability to demonstrate all of this and a staff of creative, intelligent, and hardworking folk, we are nervous about early trends we can already detect. In the current economy, previous donors from a wide spectrum of means -- from the wealthiest to the most dedicated -- are re-evaluating their contributions and/or their terms.
As Bette Davis said in The Three Faces of Eve, "Buckle up, it's going to be a bumpy ride!"

JAVA4DIVA of TX 3:41PM March 10, 2009

I'd like to sell you if you believe high end philanthropy by the very wealthy will be about the same with or without an Estate Tax.
That might be what you hear in poll surveys, but it will not be what you see in reality if Estate Tax were to go completely away.

Muser of NM 3:38PM March 05, 2009