Charitable-Giving Plan Divides Nonprofit Groups and Worries Donors
Given this analysis, “we feel this budget proposal would not have much effect on whether people give but rather how much they give at the margins,” said Patrick Rooney, the center’s director of research.
However, the center said that changes in personal income and wealth, including the condition of the stock market, affect giving more than tax proposals. It noted that every time the stock market declines by 100 points, giving declines by $1.85-billion. Charitable donations rise by that same amount when the stock market increases.
Economy Makes a Difference
Some donors, in fact, say their giving will be affected more by the economy than by any change in the charitable deduction. Barbara Clarke of Winchester, Mass., said she and her husband are not at all concerned about Mr. Obama’s proposal. But she added that they have changed the the manner in which they give because of the recent decline in the stock market.
“The crash in the value of my portfolio takes a huge asset off the table and out of the equation,” Ms. Clarke said. “This actually made me realize that the way I was managing my philanthropy was totally different from the way I managed the rest of my spending. I would never consider relying on stock for any purchases that I need to make in the next five to seven years, so why was I doing it for philanthropy? That was a big eye opener.”
The White House argues that the new economic-stimulus package will help increase giving by boosting the economy and raising incomes. (See an article explaining the White House’s view.)
But others say the proposed limit on the charitable deduction would cause a big drop in giving. “Many charity officials do not understand how tax laws impact giving by the very wealthy,” said Emil Kallina, a Baltimore lawyer who advises affluent donors, including several billionaires, on their charitable plans. “For the vast majority of my clients, every tax dollar they save is an additional dollar for charity. Under the president’s budget proposal, that could amount to hundreds of thousands of dollars on a multimillion-dollar gift.”