Proposed Limitations on Itemized (Charitable) Deductions
Draft Email to Congress
Dear Representative (Senator) XXXXX:
Please oppose any attempt to reduce the value of the tax deduction for charitable giving.
The last several years have been extremely difficult for charities, with demand for services rising
quickly while donations have dropped off. According to the IRS, charitable donations claimed on
tax returns dropped approximately 20 percent from 2007 to 2009. Putting a cap on itemized
deductions could reduce contributions by another $7 billion annually during a time when
contributions are already down.
When the economy stagnates, nonprofit organizations and their services are needed the most.
Charitable organizations bridge the gap by serving those in need when budgetary constraints
hinder local, state and federal governments from providing similar services. Reducing charitable
giving doesn’t hurt the people who give, but the people who rely upon nonprofit services.
INCLUDE A SHORT PARAGRAPH ABOUT HOW REDUCING THE CHARITABLE
DEDUCTION, AND CONTRIBUTIONS TO CHARITY, WOULD AFFECT YOUR
ORGANIZATION AND ITS PROGRAMS.
Please stand with America’s charities and defend the charitable deduction. Reducing our nation’s
deficit and debt are important, but not at the expense of programs and services that people in
YOUR COMMUNITY and YOUR STATE depend on every day.
Thank you for your support.
Talking Points

We strongly urge you to oppose the Administration’s FY 2012 budget proposal or any
proposals that would limit the value of itemized deductions for charitable contributions.
The Administration’s proposal to cap itemized deductions at 28 percent for higher
income taxpayers would have long-lasting negative consequences on charitable
organizations that millions of Americans rely on for vital programs and services.

It is estimated that the proposed cap on itemized deductions could cost charities as much
as $7 billion per year in charitable contributions.

Americans strongly support the charitable deduction. In an April 15, 2011, Gallup poll,
71 percent opposed eliminating the charitable deduction to lower the overall income tax
rate, and 68 percent opposed eliminating the charitable deduction to reduce the federal
budget deficit. More people supported the charitable deduction than the home mortgage
interest deduction or state and local tax deduction.

The difficult economy has had a significant impact upon America’s charitable
community. According to the IRS, Americans claimed deductions for $172.9 billion in
charitable contributions in 2008, a 10.6 percent drop from 2007. More recent IRS
estimates project that Americans only claimed $148.6 billion in charitable contributions
in 2009, an additional 14 percent drop. It is also worth noting that the IRS data indicates
that high income taxpayers (those earning more than $200,000) contributed $49.6 billion
to charities in 2009.

When the economy stagnates, nonprofit organizations and their services are needed the
most. Charitable organizations bridge the gap by serving our communities and those in
need when budgetary constraints hinder state and federal governments from providing
similar services. Foundations complement the work of public charities by granting money
for a variety of altruistic purposes.

Not only does reducing charitable giving harm the nonprofit sector, but it also hurts the
people—typically the poor— who rely upon these services. Despite how the proposal
looks on paper, wealthy Americans will not bear the brunt of a limitation on itemized
deductions—America’s poor will.

The charitable sector is also a major employer. The Urban Institute found that nonprofits
paid nearly $670 billion in wages and benefits in 2009 and employ more people than the
finance, insurance and real estate sectors combined.

Studies indicate that donors give for many reasons—incentives such as tax deductions
being among them. While Americans do not make charitable gifts only for tax reasons,
tax incentives make more and larger gifts possible.

Recent history and the actions of the federal government reveal that tax incentives do, in
fact, affect charitable giving. During times of crisis, such as the natural disasters like
Hurricane Katrina, the 2008 Midwest flooding and the 2010 Haiti earthquake, Congress
regularly passes charitable giving incentives to make it easier for Americans to give
donations and other support to nonprofits serving individuals, families and communities
in need. Those incentives resulted in increased levels of resources to those charities
caring for the victims.


[For GOP Members of Congress only] It is worth noting that the proposed cap on
itemized deductions essentially imposes a tax increase on higher income individuals and
families. It seems inequitable to tax the segment of the population that statistically gives
the most to charity.

[For GOP Members of Congress only] In their Backgrounder from March 29, 2011, the
Heritage Foundation suggested that capping the charitable deduction could “crowd out”
nonprofit organizations. Essentially, resources would shift from nonprofit organizations
to the federal government, which can be less efficient and less effective in caring for
those in need.

During a March 30, 2011 Senate Finance Committee hearing on tax incentives, a panel of
tax experts stated that the Administration’s proposed cap on itemized deductions would
add additional complexity to the tax code.

For the sake of the economy and America’s disadvantaged, we need to encourage all
individuals, regardless of income and wealth, to give more to charitable organizations.
Limiting the value of the charitable deduction does the exact opposite and would
fundamentally change a tax structure that has contributed to a cherished tradition of
charitable giving that is unmatched in the world.

Again, we urge you to oppose any proposal that would limit the value of itemized
deductions for charitable contributions. Thank you for your support.