President Obama has proposed changes that will limit deductions on charitable giving for upper earners. His proposed 2010 budget outline reduces tax benefits from 35% to 28%. According to Suzaane Perry, the Chronicle of Philanthropy, (February 26, 2009), "That would reduce by as much as 20 percent the amount wealthy taxpayers could get in tax breaks. Under the current system, taxpayers who are in the 33 percent or 35 percent tax brackets use that rate to claim deductions."
During a time when nonprofits are already seeing a sharp decrease in donations and an increase in demand for services, this comes as a blow to charitable organizations that are helping out struggling, homeless, and uninsured Americans. The President says this will be offset by government programs to help nonprofits (but how, is yet to be determined). Already there has been a backlash among bloggers that the government should not be deciding which nonprofits get federal dollars, and as a CEO of a national-level medical nonprofit, I must say that I agree. Charitable giving is a personal choice, not a choice government should make.internet marketing explained
Even if the proposed "offsets" are simply better access to credit, nonprofits tend to shy from loans because it puts them into debt without the benefit of repaying loans from sales or other income-generating revenue that a for-profit business has. Donors want to give to help people (or animals, or something tangible) not to pay off business debt. In fact, if a nonprofit does resort to sales or promotions and makes too much money from "unrelated business income" (non-donation income) to repay loans, it must pay taxes on that income at the same rate as any for-profit business.internet marketing explained
Corporations will be less likely to make large donations and those wonderful donors who make large donations will probably be even fewer
