Obama Budget Proposal Reportedly Spares Charitable Deduction

The Obama administration's latest budget proposal in "fiscal cliff" negotiations with Republicans appears to preserve the deduction for charitable donations at 35 percent, and nonprofit leaders are optimistic that their coordinated efforts to protect the deduction may be paying off, the Chronicle of Philanthropy reports.

While White House officials would not confirm the number — which represents a shift in the administration's well-known interest in lowering the deduction to 28 percent — the proposal reportedly calls for maintaining the charitable deduction at a 35 percent rate while capping deductions for mortgage interest and state and local taxes at 28 percent. Although Republicans rejected the overall plan on Tuesday, Independent Sector CEO Diana Aviv told the Chronicle that widespread advocacy on the part of nonprofits nationwide was having an impact. "If there is fluidity and movement in regards to treating the charitable tax deduction differently than other deductions, then that's terrific," said Aviv. "It means the community's voice has been heard."

Bauman Foundation executive director Gary Bass told the Chronicle that Independent Sector's two-page advertisement in Politico last week "stirred things up quite a bit." The letter, published a week after more than two hundred and fifty nonprofit officials converged on Capitol Hill to lobby for preservation of the charitable deduction in its current form, was signed by more than nine hundred nonprofit leaders. "The Republicans responded by saying that their intent is not to undermine charities. So I think there is sensitivity to the charitable deduction right now," said Bass. "The White House had been quite happy with 28 percent before."

Doug Donovan. "Obama Plan Spares Charitable Deduction." Chronicle of Philanthropy 12/18/2012.