Proposed Tax Changes Could Further Stress Nonprofits

Proposed Tax Changes Could Further Stress Nonprofits

October 27, 2011 by jga_admin

by Ted Grossnickle


The Center on Philanthropy atIndiana University released their analysis yesterday of the impact the Obama Administration’s proposed tax changes may have on nonprofits.

In their view, impact of the proposed 7% reduction of the value of charitable deductions allowed for taxpayers with an AGI of more than $250,000 would be relatively small. More concerning are the estimated impact of proposed higher tax rates for this income bracket. Though they represent only 3% of all tax returns in 2008, these taxpayers claimed 43.5% of all itemized charitable giving deductions.

“Our estimates indicate that if the Administration’s proposals had taken effect in 2009 and 2010, total itemized giving would have declined by 0.4 percent in the first year and by 1.3 percent in the second year,” said Patrick M. Rooney, executive director of the Center on Philanthropy. “This suggests a relatively small direct impact, but combined with the weak economic climate, funding reductions and increased demand for services already affecting some nonprofits and their constituents, these changes are likely to have an additional negative effect in the long term.”

As Rooney points out, with the many other stressors weighing on the nonprofit community currently, the impact could likely be magnified and comes at a time when few nonprofits are at the pinnacle of stability. What nonprofits need and what donors need, is more stability in the overall economy.

Thank you to the Center on Philanthropy and our respected colleagues at Campbell & Company for supporting this research.