The fiscal and tax issues in our country today should not be of concern only for individuals and their own income, but also for those who are interested in the work of countless nonprofit organizations in our own communities.
In particular, nonprofit organizations that carry the 501(c)(3) status, such as arts groups, hospitals, private schools, religious congregations and public television and radio stations, are facing a drastic change in their current funding models.
Right now, charitable giving to these nonprofit 501(c)(3) organizations is tax deductible. These donations accounted for 31 percent of revenue this past year in arts organizations alone, whereas 60 percent of revenue is from earned income. The remaining 9 percent comes from government funding.
President Barack Obama's Fiscal Year 2013 budget proposal would eliminate the value of tax deductions from income tax rates, thus capping deductions at 28 percent for individuals.
There also have been other, more-drastic proposals to eliminate any income tax deductions for gifts to 501(c)(3) organizations. The thought is that the elimination of these deductions would increase tax revenue for the federal government.
These proposed changes in the tax code would be more costly for individuals and, quite frankly, detrimental to the nonprofit sector.
I urge everyone to consider the outcome of hasty and extreme decisions regarding the tax code, and deductions in particular. Diminishing charitable-giving incentives with the idea of increasing federal revenue would have a lasting effect and negative consequences for nonprofit services and jobs.
Charitable giving is a significant revenue source for a wide range of nonprofits in our community, county, state and country. In arts organizations, ticket sales and admission fees alone would not even come close to covering the cost of presentations, educational programs, community-based programs and other services provided by the various organizations.
The desire to give to arts organizations usually is done from the heart because donors and patrons enjoy the product that these nonprofits produce. Limiting, reducing or eliminating the value of charitable giving and deductions would most certainly change the fundamental structure of funding for all arts organizations and, for that matter, all nonprofit organizations.
Think of it this way: When people or corporations/businesses are thriving, they often feel led to give more to the groups that they care about in their communities. The incentive would be a break in how much they owe to the government because they are supporting the hard work of individuals and groups that stimulate the members of their community.
Change the current setup to where people would owe more to the government and not get the same break for giving money away to charity or nonprofit groups, and those groups would earn less — and be able to do less.
It is a setup for a lose-lose situation.
People who care about non-profits in our community should communicate with their relatives, neighbors, friends and elected officials about the importance of protecting the charitable-giving deductions.
Without this very important source of income, these organizations would face great difficulty in surviving and staying relevant in our community.