Charitable-Giving Plan Divides Nonprofit Groups and Worries Donors

“It certainly is not going to make things better,” she said. “The question is how much worse it will be on top of worse. With the economy this bad, it does worry me that a new policy would be in place, giving wealthy people a disincentive to give.”

That is already the case for some wealthier donors, even though the plan is far from becoming law. Mike Bacile, owner of a Dallas company that provides equipment to restaurants and hotels, said he and his wife have recently set up meetings with officials at two charities to inform them that they will no longer be able to support their causes. Mr. Bacile said he and his wife typically give more than $10,000 to nonprofit groups annually — but they are now scaling back their contributions to about $5,000 annually.

“The upcoming tax hit has forced us to decide what must go,” Mr. Bacile said. “We will still be giving about $5,000 a year to charities that are very important to us for sentimental reasons, But the remaining $5,000 to $6,000 will be going to Obama’s plan. I am not a fan of government deciding what charities deserve my money.”

Plan Won’t ‘Kill Giving’
But some experts believe concerns about the economic impact of lowering the charitable deduction are exaggerated, and the actual effects of the provision on giving by the wealthy would be relatively modest.

“Every time people want to fool around with the tax code, [charities] say it will be the end of philanthropy,” said Bruce Flessner, a Minneapolis fund-raising consultant. “I don’t think it will kill giving.”

Using 2006 tax data, the most recent available, Indiana University’s Center on Philanthropy has estimated that giving by high-income households would have been 4.8 percent less if President Obama’s proposed limits on charitable deductions, and increases in taxes owed by the wealthiest Americans were in effect then.