Don’t tamper with charitable deduction in tax code

Federal lawmakers are heading into an intense period of political and policy debate about the budget, deficit reduction and tax reform. There is growing and urgent concern that elected officials are seriously considering unraveling a 100-year-old American tradition that encourages charitable giving and benefits millions of people. In jeopardy is the provision that allows taxpayers to deduct donations to charities.

More than 20 percent of all taxpayers in Florida (1.93 million Floridians) use this deduction, which is designed to encourage donors to support worthy causes. Add up the donations they made to charities in 2010, and it comes to an incredible $12.4 billion.

It’s important to recognize that donors at all income levels itemize their deductions — not just the wealthy. In fact, more than half of Florida’s taxpayers who use the charitable deduction earn less than $75,000 annually, and one-third earn less than $50,000.

South Florida is fortunate to be home to so many people who carry on the unique American tradition of charitable giving.

We have foundations willing to take a leadership role to encourage philanthropy, and residents willing to dig deep into their pockets to help those who are less fortunate. In fact, Miami-Dade, Broward and Palm Beach counties are among the top one percent of all counties in the country for total individual charitable giving, according to The Chronicle of Philanthropy. In terms of foundation giving, South Florida ranks No. 1 of all regions in the state, according to Florida Philanthropic Network, with more than half of foundation grant dollars coming from our region.

While elected officials in Washington express support for the value and impact of charitable giving, proposals on the table pose a real threat to incentives that encourage this kind of generosity.

According to a recent public opinion poll conducted by United Way Worldwide, nearly 80 percent of Americans agree that reducing or eliminating the charitable deduction would have a negative impact on charities and the people they serve. Nearly two-thirds say they would have to reduce their contributions by a significant amount — 25 percent or more. Americans are a giving people and are likely to support worthy charities whether or not there is a charitable deduction, but the charitable deduction often will encourage people to give more.

Charities and philanthropy play a vital role in South Florida. When our region and state have been struck by disasters in the past, charities and foundations stepped up to respond. Many South Floridians have been hit hard by the economic recession. We hear many stories about how people’s lives have been turned upside down after facing the loss of a job or a home. Charities in the region are working hard to help them with basic needs like food, clothing and shelter, and they are reporting an increase in demand for their services.

In fact, a recent survey from the Nonprofit Finance Fund reveals that for the first time in the survey’s five-year history, more than half of the charities say they could not meet demands for assistance last year, and expect the number to increase this year. One in four had less than 30 days’ cash on hand. We should proceed cautiously in making any decisions that could worsen the situation for charities that are still reeling from the effects of the recession.

Tough decisions must be made to tackle the nation’s fiscal challenges without hurting our communities. At a time when charitable contributions are more vital than ever to meet the growing needs in our communities, it seems unwise for Washington to consider changes as part of tax reform that would hurt the charitable community and the valuable services it provides.

Now more than ever, we should be working together to find ways to encourage more giving, not less.

David Biemesderfer is President & CEO of Florida Philanthropic Network, a statewide association of grantmakers working to build philanthropy to build a better Florida. For more information visit Javier Alberto Soto is President & CEO of The Miami Foundation, which has helped hundreds of people create personal, permanent and powerful legacies by establishing charitable funds.

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