Charitable Deduction Threatened Despite Widespread Public Favor

Proposals to limit the tax deduction for charitable donations have garnered significant attention as politicians seek to avoid the looming fiscal cliff. President Obama has proposed, as a part of his annual budget proposals, limiting income tax deductions to 28 percent, even for households in higher income tax brackets. During the presidential campaign, Mitt Romney floated limiting deductions to a firm cap, similar to a proposal Martin S. Feldstein, a professor of economics at Harvard, and chairman of the Council of Economic Advisers from 1982 to 1984 under President Ronald Reagan, suggested to policymakers in 2011.

However, a post-election national poll for the National Association of College and University Business Officers (NACUBO) and the Council for Advancement and Support of Education (CASE) reveals that most United States voters have a favorable opinion of the charitable giving tax deduction. The poll data show that most voters are familiar with and favorable toward the deduction regardless of party affiliation: 78 percent of all voters are favorable (79 percent of Democrats, 77 percent of Republicans, and 77 percent of Independents).

In a January 2012 report, the Joint Committee on Taxation released "Estimates of Federal Tax Expenditures for Fiscal Years 2011-2015." According to the report, more than 33 million individuals claimed $36 billion in charitable deductions in 2010.

In a news release issued on Monday, December 3, NACUBO President and CEO John Walda remarks, "The data make it clear that support for the charitable deduction cuts across party lines. The charitable deduction has served as a tool for the public to financially support causes and organizations that address community and societal needs in lieu of government-provided services. Charitable contributions have become integral to helping colleges and universities achieve their teaching, research and public service missions."

Anxious that fiscal cliff negotiators may include a limit on charitable giving tax incentives, a group called the Charitable Giving Coalition has organized Capitol Hill advocacy activities on December 4 and 5 that will focus on preventing the lame duck Congress from curtailing the charitable deduction. More than 200 individuals will be in Washington to make the case that providing tax incentives encourages giving, and that charitable donations help create jobs, improve education and health care, protect the environment, aid the most vulnerable and more.

NACUBO, with the American Council on Education and 15 other higher education associations, recently sent letters to President Obama and congressional leaders expressing concern about the proposals to limit the charitable deduction and the impact on colleges and universities. The letter states, "We recognize the need for a major, balanced, long-term deficit-reduction agreement, and we are mindful that this likely will result in sacrifice shared broadly across the country," but urges them, "to proceed cautiously when considering changes to the current charitable deduction, which helps generate needed private support for thousands of organizations and institutions, including colleges and universities and the students they serve."