Congress Likely to Tinker with the Charitable Deduction and Exemption Laws Next Year

On September 4, 2008, the Chronicle of Philanthropy reports that charities should be concerned about the fate of the charitable contribution deduction and other charity-friendly policies.  Here is an excerpt from the article:

No matter who wins November’s elections, Congress will be looking for ways to rein in the country’s enormous budget deficit and pay for new programs. Many states have been hit hard by the economic downturn and are looking for new revenue. Social-service charities are struggling to meet growing demand while big universities and arts groups report record gifts.

Sentiment is growing in both political parties to encourage “giving that will meet the enormous unmet human needs that are out there,” says Dean Zerbe, a former top aide to Senator Grassley who is now national managing director for Alliant Group, in Washington. “It’s difficult, it’s going to take a real rethink to say, Can we define what is a charity?”

Diana Aviv, president of Independent Sector, an association of big charities and foundations, sees the writing on the wall. Last spring, she assembled 16 foundation and nonprofit leaders to form the Advisory Group on Defining the Charitable Sector. Its mission: to examine the roles of charities and foundations and the rationales for their tax exemptions, as well as the charitable tax deduction.

“We decided to take a deep and hard look at every aspect of nonprofit practice for the purpose of understanding whether the sector as we know it is the sector as it should be,” she says.

The article also quotes our very own contributing editor, John Colombo:

John D. Colombo, professor of law at the University of Illinois, says he believes nonprofit hospitals have become such business-likeoperations that they probably should no longer be labeled “charitable.” However, he adds, stripping them of their tax exemption cannot be done in isolation.

For the entire story, see “Paying it Forward – and Back: Nonprofit Leaders Worry as Congress Rethinks Tax Breaks for Donors and Other Charity Policies” in the September 4, 2008, issue of the Chronicle of Philanthropy.

DAB