Fiscal cliff law brings mixed news to charitable organizations
Charity leaders say they're relieved the tax law Congress passed on New Year's Day does not more severely limit the tax advantages of making donations.
The American Taxpayer Relief Act of 2012, which kept the country from going over the “fiscal cliff,” erases some uncertainty about tax rules that affect giving but still might impact charities and donors, the leaders said.
“There's some good in it and some bad in it for charities,” said Jack R. Owen, a tax lawyer for nonprofits who works with the Downtown firm Rhoades & Wodarczyk. “Congress gives with one hand and takes with the other.”
For most Americans, the law extended tax cuts that took effect during the past decade and delayed drastic budget cuts to government-funded programs. But it ended the 2 percentage point cut in Social Security payroll taxes that had been in place for two years, resulting in lower take-home pay for most workers.
Charities amount to a $1.4 trillion economic sector employing one of every 10 workers nationwide, said Scott B. Leff, associate director of the Bayer Center for Nonprofit Management at Robert Morris University in Moon.
“Basically, everyone in the country is affected by the services nonprofits offer,” Leff said. “It's not only the safety net agencies; it's the health system, the educational system, our arts and culture, our libraries, houses of worship.”
Leaders said it was unclear how much the cut in take-home pay for most workers would affect giving.
Jeffrey A. Lydenberg, board chairman for 2013 for the Partnership for Philanthropic Planning in Indianapolis, said the law takes guesswork out of exemptions and estate taxes.
“Now this isn't just temporary. We have certainty,” said Lydenberg, whose organization of 128 local councils and more than 10,000 members educates, sets standards and advises nonprofits and charities on estates and giving.
The law limits tax savings from itemized deductions as a person's income rises; above a certain level, donors may not deduct the full amount of their contribution.
“You're saying to donors, ‘We're going to make it less beneficial for you to support charities' at the time charities need your support more than ever,” said Jack Miller, vice president for development at Baptist Homes in Scott and a development consultant for Pittsburgh History & Landmarks Foundation.
Some said people will give, no matter what the tax rules say.
“Tax deductions for charitable giving are nice, but they're not the main motivator,” said Fay Morgan, executive director of North Hills Community Outreach in Hampton. “Maybe (donors) wouldn't support the opera without it, but most people understand you can't let a neighbor go hungry.”
The law enhanced tax incentives for businesses to contribute food to pantries, she said.
It raised the tax rate on the estates of the wealthy, from 35 percent to 40 percent on estates worth more than $5 million. Estates of smaller amounts, and for couples with a combined estate of up to $10.5 million, will be free of federal taxes, said Lydenberg.
“We know that the more money that stays in the estates of individuals, it's most likely we will get it,” said Diana Aviv, president of the Independent Sector in Washington, a coalition of about 600 charities, foundations and corporate giving programs.
Lydenberg noted, however, that studies show a small amount of nationwide charitable contributions comes from estates.
A Giving USA study by the Center on Philanthropy at Indiana University showed donations to charities totaled $298.4 billion in 2011, he said. Of that, $24.4 billion, or 8 percent, came from bequests. About 73 percent, or $217.8 billion, came from individuals.
Bill Zlatos is a staff writer for Trib Total Media.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Falling bricks close 2 Squirrel Hill businesses
- Owner of Penn Hills tombstone business pleads guilty to swindling the bereaved
- Brookline 12-year-old crashes mother’s car
- Carnegie Mellon University’s Speck device monitors indoor pollution
- 17 Pennsylvania veterans inducted into Hall of Valor
- Newsmaker: Sharna Olfman
- ‘Swing Night’ has feel of Prohibition-era dance hall
- Mt. Lebanon native, Iraq war hero’s action goes unrewarded
- Shortfalls sabotage promise of union retirees’ pensions
- New Castle-area racino remains in limbo
- School choice tax credit expansion bill touted