Tax Break Might Add 18,000 Charity Jobs

A tax credit proposed as part of a Senate jobs bill could provide $1-billion in savings to nonprofit groups and help create 8,000 to 18,000 new nonprofit jobs, according to an analysis by the Alliance for Children and Families.

The measure—drawn up by Sens. Charles E. Schumer, Democrat of New York, and Orrin Hatch, Republican of Utah—would exempt nonprofit groups and other private employers from paying their share of Social Security taxes for employees they hire through the end of 2010. The new employees must have been out of work for at least 60 days.

Employers would get an additional $1,000 tax credit if they kept the employee on the payroll for a full year.

The Alliance for Children and Families—an association of human-services groups—used Congressional Budget Office analyses on the impact of job tax credits to estimate how the proposal would affect nonprofit jobs, which make up about 10 percent of the work force.

Patrick Lester, the alliance’s senior vice president for public policy, writes on the blog Washington Insider that the estimates could be low because, unlike in the business world, demand for nonprofit services—and the people to provide them—rises during hard times.

He acknowledges, however, that the tax break alone might not be enough to spur nonprofit employers to hire. Cuts in government spending and private giving during a slow economy could cause them to refrain from adding jobs.

Harry Reid, the Nevada Democrat who is the Senate majority leader, included the tax credit in a jobs bill he proposed this month. President Obama has offered a different proposal that would give nonprofit and other employers a $5,000 federal tax credit for every net new employee they add in 2010 and reimburse them for any taxes they owe to Social Security because they have a bigger payroll.