The Wall Street Journal has an article today discussing the Obama Administration’s budget plans. The proposed plan has a provision that takes the deduction rate for a charitiable gift down to 28% from 35% in 2011 for the wealthiest Americans. The article points to the fact that a $10,000 gift would receive a $2,800 deduction for the highest tax bracket compared to a middle calss family in the 15% tax bracket receiving a $1,500 deduction on the same donation.

Fundraising professionals list ‘a tax advantage/deduction’ at the bottom of the top ten list when looking at the primary motivation of an individual donor. Many nonprofit organizations list information on the tax advantages of making a charitable gift at the end of their fundraising materials. They speak about their programs and services, the people served, their successes. For the most part their is no difference in the tax deduction between qualifiying nonprofit A and B so it does not get discussed at any length.

The proposed deduction change will effect all nonprofit organizations equally, but suddenly the sector is talking about this being a disincentive to donors. The same organizations promote nine other reasons to give to their cause before the issue of deductability is breached. Additionally, the change in tax code is going to effect the larger national organizations more than the local nonprofit enterprise as majority of the largest gifts from the wealthiest individuals are concentrated in organizations that have the capacity and need to accept tens of millions of dollars.

I think those of us in the nonprofit sector need to be clear. If we truely believe that donors are motivated by the needs we meet, the quality and impact of our services, the personal commitment of our staff members, then we need to focus our energies in fullfilling our missions most effectively and efficiently. If we have not been walking our talk and the tax deduction is a major factor in the nonprofit sector’s ability to raise money then we need to take up our lobbying hats and have a say in our nation’s capitol.

WSJ article: http://online.wsj.com/article/SB123595480077405235.html