February 7, 2008 | Read Time: 2 minutes
Independent Sector, the coalition of major charities and foundations, has asked Congress to extend two tax incentives that help charities — one to encourage donations from individual retirement accounts and the other to promote food donations — as a way to stimulate the economy.
“I state emphatically that the experience of many in the charitable community indicates that people are indeed struggling in this economy and that stimulus is truly warranted,” said Diana Aviv, the group’s president, in a statement that was submitted to the Senate Finance Committee. “As institutions, charitable organizations are also experiencing higher costs, particularly for fuel, that reduce the resources available to support their programs,” she added.
Ms. Aviv asked Congress to extend a measure, which expired at the end of 2007, that allowed people at age 70Z\x to transfer up to $100,000 a year from their IRA’s to charity without paying income taxes on it.
The House agreed to continue the incentive for one more year as part of a larger tax-relief bill in November, but the Senate dropped the provision. Independent Sector is now pushing to include it in legislation Congress is expected to consider early this year to extend expired tax provisions.
Ms. Aviv told the Finance Committee, which held a hearing on the economy, that IRA contributions can act as a stimulus by “taking money from passive investment accounts and injecting it into the economy.”
She cited several examples of donors who had directed hospitals to use their IRA money to buy specific goods, such as bassinets, or to pay for renovations or building projects.
Ms. Aviv also urged Congress to extend a provision, which also expired at the end of last year, that allows grocery stores, farmers, ranchers, small businesses, and restaurants that donate excess food to charity to get the same tax break — known as an “enhanced tax deduction” — as corporations do for donating their products. In general, federal law allows companies to deduct the production costs of certain goods they donate, which is usually below their fair-market value. The enhanced deduction allows them to deduct production costs plus part of the difference between those costs and the market value.
This “would have an immediate impact on the lives of persons struggling to get by in a slowing economy, and give essential assistance to the charities that are dedicated to serving their needs,” Ms. Aviv said.
