THE CHRONICLE OF
PHIL A NTHROPY®
The Newspaper of the Nonprofit World
Volume XXIII, No. 4 • December 2, 2010 • $5
Two sets of recommendations issued
in November, one by the co-chairs of a
deficit commission appointed by President Obama and the other by a committee that includes former Democratic
and Republican government officials,
suggested either limiting or ending
charitable deductions as part of a package of spending cuts and tax increases
designed to get the country on sounder
economic footing.
Charitable Deduction Under Scrutiny
Proposals to trim the federal budget take aim at a cornerstone of giving
By Suzanne Perry
THE GROWING PRESSURE on Wash- ington to restrain the spiraling federal debt has once again put
the future of the charitable deduction
into question.
After Congress rebuffed President
Obama’s call to limit the tax break
for charitable gifts to help pay for last
year’s health-care overhaul, many non-profit advocates hoped that lawmakers
would consider the deduction off-limits.
But new proposals now swirling
around Washington suggest that it
will remain fair game, along with other once-sacrosanct measures, as policy-makers struggle to balance the federal
budget.
“The conversation has shifted from,
‘We can’t touch the charitable deduction’ to ‘The charitable deduction is on
the table and we have to think seriously
about [it],’ ” says Roger Colinvaux, a former top aide to Congress’s Joint Committee on Taxation who is now an associate law professor at Catholic University.
Nonprofits Urged to Prepare
Both plans include other ideas that
have in the past been politically toxic,
such as measures that would limit the
mortgage-interest deduction and raise
the amount of wages that are subject
to Social Security taxes, so it is unclear
how far they will get. But experts say
nonprofit groups need to be prepared
for the changing political momentum.
“There are scenarios that we are
very concerned about in which changes
to the charitable deduction could take
place,” says Steve Taylor, vice presi-
dent for public policy at United Way
Worldwide, who believes limiting the
tax break would seriously dampen giv-
ing at a time when more Americans are
turning to charities because of the bad
economy. “The most obvious scenario is
that some massive tax-reform package
that is somehow set up as a take-it-or-
leave-it package might include changes
to the charitable-deduction law.”
Michael W. Peregrine, a lawyer in
Chicago who advises nonprofits, says he
is telling his clients to prepare for pos-
sible revenue losses because of chang-
es to the charitable tax break. What’s
more, he tells them, if lawmakers “in
full deficit-reduction mode” find it too
politically difficult to tamper with the
charitable deduction, they might try in-
stead to tighten restrictions on tax-ex-
empt organizations, like they did in the
health-care-overhaul law by requiring
nonprofit hospitals to provide certain
services to their communities. “I’m tell-
ing boards, It may be five years away,
it may be 10 years away; you’ve got to
start planning this now,” he says.
“I’m telling boards,
It may be five years away,
it may be 10 years away;
you’ve got to start planning
this now.”
primarily because of concerns about the
growing budget deficit, which has been
aggravated by the recession and given top priority by the increasingly influential small-government Tea Party
Continued on Page 15
A Heartfelt Approach to Giving
FOSTER FRIESS WI TH HAI TIAN KIDS
ARNICA SPRING
Foster Friess, the retired billionaire investor, and his wife, Lynn, have given
millions to an array of causes, including more than $5-million total in the
wake of Hurricane Katrina, the Asian tsunami, and Haiti’s earthquake.
Their giving is driven by bedrock beliefs in both Christianity and free-market economics. To learn more, go to Page 29.
Charities With an Expiration Date
Hurry to Make a Lasting Mark
By Maureen West
IMAGINE CHARITIES created with their own self-destruct mechanisms built in.
Realizing Rights, an eight-year-old
New York human-rights group founded by Mary Robinson, former president of Ireland, and Water Advocates,
a five-year-old Washington group that
promotes safe water in the developing
world, will both blink out of existence
this month, as planned. Both groups
were designed to change the way global problems are perceived and solved,
without adding permanently to the non-profit world’s burden of too many charities.
While a small but growing number
of foundations, such as Atlantic Philan-
thropies, have made clear their inten-
tions to spend all their assets and shut
down, charities that set their own ex-
piration date are relatively rare. But
the leaders of these two groups, and
researchers who have studied one of
them, say more charities may want to
consider the approach.
Year-End Giving
n Charities are unleashing their
creativity with new ideas for
wooing holiday-season donors
in a tough fund-raising climate.
Among the tactics: City Harvest,
in New York, is running ads with
pictures of donors like this one.
Page 7
Little Helpers
n As more parents seek ways to
show their children how to give,
charities find that creating fam-
ily-friendly volunteering oppor-
tunities can help them stretch
resources and build support for
the future. Page 21
