February 8, 2001 | Read Time: 4 minutes
By PETER B. GOLDBERG
Charity executives will be paying close attention over the coming months to one of the Bush administration’s central tax proposals: eliminating the estate tax, and with it, the deduction for charitable bequests from the estates of wealthy people. But another tax-policy issue — one that does not directly affect the wealthy — cries out for much greater attention from philanthropic leaders, especially those whose own employees are charitable donors: a tax deduction for donors who don’t itemize on their tax returns.
As leaders of nonprofit institutions, we should be doing all we can to urge Congress to allow people of moderate means to deduct their charitable gifts, even if they don’t itemize. That’s especially true for those of us who run nonprofit human-service organizations employing dedicated, but modestly paid, workers.
Under current law, some 70 percent of American taxpayers cannot deduct their donations. Nearly all of them are low- or middle-income wage earners. And, as has been documented repeatedly, people who are on the lower end of the income scales are among those who give the highest percentage of their household income to charity. Some of those people are charity caseworkers, field organizers, office administrators, and grant-proposal writers — the people who sustain the work of nonprofit human-service groups.
Most of us who run nonprofit institutions encourage our employees to participate in United Way campaigns and other kinds of giving programs. And, many of our employees contribute to our own organizations. Considering the extent to which we encourage charitable giving by our own employees, nonprofit human-service leaders must stand up in their behalf and vigorously pursue the adoption of this eminently fair and reasonable tax policy.
Passage of the measure would restore benefits that existed briefly in the mid-1980s but succumbed to a major overhaul of the tax code in 1986. Unlike proposed changes to the estate tax, which directly affects only a small portion of the nation’s wealthiest Americans, the nonitemizer proposal extends to 84 million taxpayers earning modest wages — a group that includes most of the two million nonprofit, human-service employees.
Certainly, nonprofit groups have a vested interest in tax-policy changes that could affect the billions of dollars that charities need to continue working on social issues. And while the provision would cost the government an estimated $75.8-billion over 10 years, a recent study by the accounting firm of PricewaterhouseCoopers found that it would increase charitable giving by as much as $14-billion annually — a sum that, over a decade, would far exceed the cost to the Treasury. And although charitable giving should not relieve the government of its social-welfare funding responsibility, the nonitemizer proposal would help charities carry out their responsibilities.
Moreover, enactment of the nonitemizer proposal also would help to reinforce the value of charitable giving in this country. In backing the nonitemizer proposal, it is that cherished value, rather than the magnitude of the financial impact, that matters most.
Independent Sector, an umbrella group of nonprofit organizations of which I am chairman, has been actively seeking support for the proposal, and optimism is strong that Congress eventually will pass the measure. President Bush endorsed the idea during his campaign for the White House. Last year, measures were introduced in the House and Senate to allow people who do not itemize to deduct up to $500 annually for charitable gifts. The proposal, which was called the Charitable Giving Tax Relief Act, garnered 149 co-sponsors in the House of Representatives, including a majority of members on the Ways and Means Committee. In the Senate, Republicans Rick Santorum of Pennsylvania and Paul Coverdell of Georgia introduced the measure, and it received the endorsement of Sen. Joseph I. Lieberman, the Connecticut Democrat.
While the tax policy was not enacted last year, existing Congressional support provides a strong foundation to build upon in 2001.
Nevertheless, this year presents a make-or-break opportunity to extend deductions to those who don’t itemize. It is up to us — those who represent the employees and the values of the human-service arena — as well as leaders throughout the entire nonprofit world to stand up for passage of this tax-fairness legislation.
Peter B. Goldberg is chief executive officer of the Alliance for Children and Families, a nonprofit membership association in Milwaukee that represents more than 350 child- and family-service organizations. Mr. Goldberg can be reached at pgoldberg@alliance1.org.
