Thursday, October 1, 2009

Taxing the Charitable Deduction—A Bad Idea

There’s no bigger issue right now than healthcare, and charities have been right in the middle of it. In particular, AFP has been following a proposal to reduce the value of the charitable deduction (basically, delinking it from the tax rate) to raise additional revenue.

AFP has been outspoken in its opposition to this idea. In fact, this week we’re asking you to contact Congress and urge them to protect the charitable deduction. I hope you will participate in this campaign—it’s really important!

I know some of you have questions about AFP’s position, and there’s been some criticism from a few media pundits about why the sector is generally opposed to this idea. So I wanted to let you know how we came to this position and why AFP is taking this action.

In my mind, there are three main reasons. First is the issue of the deduction and its impact on giving. It’s true that people give for all sorts of reasons, and tax deductions usually are not a key factor. However, research shows that deductions do play a role in the SIZE of gifts, especially as the gift range gets larger. That cause alone is enough to make us concerned.

But even more alarming is that while the current change is seemingly small, delinking the deduction from the tax rate sets a very bad precedent. Congress is ALWAYS looking for additional revenue. Once it has a foot in the door, there are numerous examples of Congress going back to the same well for more money in the future. Delinking the deduction would make it a political football, and the deduction would no longer have any basis or foundation as to what it should be, just the whim of Congress.

Third, taxing charities, or in this case the charitable deduction—which would impact charities—simply doesn’t make sense to help pay for healthcare. A lot of charities are already involved in healthcare delivery. Many others exist to increase the quality of life and overall health of people and communities. This sort of tax on charitable deductions is a bit like robbing Peter to pay Paul, and is especially harmful in the current economic environment.

Our opposition has nothing to do with AFP’s take on healthcare reform or President Obama. Our issues revolve around fundraising. We have to be solely focused on fundraising, or else we’re not fulfilling our mission or serving members in the best way possible. We remain nonpartisan and approach every issue based on how it will affect our profession.

You may not agree with our position, and that happens on many issues we have to address. But we have heard a strong message from a significant number of our members who have urged AFP to oppose this proposal—more so than with any other public policy issue in recent memory. Our U.S. Government Relations Committee, made up of member volunteers that drive our policy positions, has discussed and debated this issue for many months. After much deliberation, the committee decided this was the best position for the association. And I believe it’s the best course of action for the profession.


  1. This is absolutely the right position for AFP to take. Thanks for resisting the Beltway mentality of blindly supporting everything coming from the current administration and congressional leadership. These are serious times with decisions having a potential negative impact far into the future.

  2. If deduction for charity are taxed, as everything in this country seems to be, charity will suffer. Taxes will defeat a lot of the purposes of giving in the first place.