The President has now released his proposed budget putting a cap on charitable deductions — estimated to cost nonprofits nationwide $5.6 billion in giving. In filing their tax returns many Michiganders are learning Michigan Charitable Tax Credits are now history. On April 24 we celebrate “Giving and Volunteering” at the State Capitol — recognizing that more than 87 percent of Michiganders report they give.
Why is this important? It is about jobs. One in 10 Michiganders works for a nonprofit, and individual givers are the largest source of financial support. Political leaders have said Michiganders will continue to give. Yes, giving is an act of the heart, but how much we give is influenced by tax policies in Washington and Lansing.
For example, the 2012 loss of Michigan Charitable Tax Credits has resulted in a reduction in giving to community foundations and food banks. For 20 years we, as families or individuals, have given $400 or $200 to our local community foundation or food bank and received a 50 percent state tax credit. The Johnson Center at Grand Valley State University has surveyed community foundations, and the Michigan Food Bank Council has surveyed their members.
Responding community foundations reported a 51 percent reduction in $400 gifts — a loss of more than $1 million. Kareemah El-Amin, Executive Director of the Food Bank Council of Michigan, says her members reported a drop of 47 percent in $400 gifts.
These examples are not good news when considering that 60 percent of Americans responding to a United Way Worldwide survey reported they will need to decrease their giving 25 percent or more if the tax deduction is limited.
The President’s budget has arrived at the same time as a push for tax reform is under way, led by the House Ways and Means Committee Chairman Dave Camp and Ranking Minority Member Sander Levin — two great Michiganders who understand the value of a strong nonprofit sector. However, because of recent federal budget cuts, the pressure on nonprofits to do more is intense. Yet, many nonprofits will need to reduce their hours, reduce their staff, and reduce the opportunity to mobilize thousands of Michiganders who volunteer.
So here is my ask — the next time you see an elected official please remind them that:
n Individual givers and charitable foundations cannot replace government funding,
n The charitable tax deduction is not a loophole for the wealthy, the real beneficiaries are those served by the nonprofits that employ so many of our friends and neighbors, and
n The charitable tax deduction is a model that other democracies around the world have modeled.
Yes, tough budget decisions need to be made in both Washington and Lansing. We have already lost giving by the loss of the Michigan Charitable Tax Credits. Much is at risk for Michigan. Reducing or limiting the charitable tax deduction is not a solution.
Last but not least, thank you for giving and volunteering and encourage everyone to join you. You, individually and together, make Michigan — “Pure Michigan.”
About the author: Robert S. Collier is president and chief executive officer of teh Council of Michigan Foundations.
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