Fund Raising

Obama’s 2015 Budget Would Cap Charitable Deduction for Top Earners

March 05, 2014

Nonprofit groups criticized a plan offered by President Obama on Tuesday that would limit the value of all tax deductions, including the charitable deduction, for wealthy taxpayers.

In his budget proposal for the 2015 fiscal year, which starts on October 1, Mr. Obama called for all deductions to be capped at 28 percent for the most-affluent Americans. The change would affect individuals who earned more than $186,350 a year and couples who earned more than $226,850.

Colleges, foundations, and charities have successfully fought back similar attempts to limit the deduction in each of the past six years but said they felt a sense of urgency this year because the tight federal budget has forced lawmakers to try to generate tax revenue wherever they can.

"Everything is on the table," said Vikki Spruill, chief executive of the Council on Foundations.

Limiting the charitable deduction would have a "cascading impact" on charities that depend on money from private sources, she said. "This is an ‘if it ain’t broke, don’t fix it’ situation."

Both Parties

It’s not just a Democratic administration that is seeking to limit tax write-offs for charitable giving and other causes. Republican members of the House of Representatives have also taken aim at the charitable deduction.

Last week Rep. Dave Camp, a Michigan Republican who is chairman of the House Ways and Means Committee, released a tax blueprint that would also make changes in the charitable deduction. Mr. Camp’s draft legislation would allow people to take deductions for contributions that exceeded 2 percent of an individual’s gross income.

Though many nonprofit leaders and experts on public policy have expressed doubt that either proposal would be enacted during a politically polarizing election year, Ms. Spruill said nonprofit organizations should remain vigilant.

"You cannot take any of this lightly," she said. "These are the things that begin to frame the agenda."

Alex Daniels is a staff reporter at The Chronicle of Philanthropy.