Charity groups will fight to keep deductions in any tax reform law
Boston — Many charity organizations in the United States are concerned about the possibility of losing one of their strongest selling points - the promise that ''your contributions are tax deductible.''
Representatives of these groups claim that some tax-simplification plans being considered in Washington will reduce by as much as 20 percent the contributions they rely on.
Bob Smucker, vice-president for governmental relations of Independent Sector, an umbrella organization of charities and grantmaking foundations, says there's a delicate balance between charitable giving and the nation's tax laws.
''People don't decide to give based on how they're taxed. They give because they're altruistic,'' Mr. Smucker says. But the amount they give is often influenced by tax incentives, he adds.
There are hundreds of thousands of private, nonprofit organizations in the US , including such diverse groups as symphonies, museums, soup kitchens, colleges, hospitals, and churches.
Individuals gave just under $60 billion to these groups in 1983, according to Independent Sector. Slightly more than half of that went to religious organizations.
Charitable organizations have been working for a number of years to promote tax incentives for giving. In 1981 they succeeded in getting Congress to pass the Charitable Contributions Law (CCL), which enables US taxpayers who don't itemize deductions on their income-tax forms to deduct charity donations.
Before the law was changed, the two-thirds of American taxpayers who don't itemize deductions on their income-tax returns were unable to claim such a deduction.
The change is being phased in over a five-year period. By 1986, taxpayers who don't itemize their deductions will be allowed to deduct the full amount they donate to charities.
Smucker says Independent Sector research indicates that this will generate $3 billion to $6 billion more a year in donations to charities.
But the CCL is scheduled to expire after 1986, and a bill to make it permanent was introduced in Congress earlier this year. Although the measure gained ''substantial support,'' Smucker says, it did not come up for a vote in the 1984 congressional session. He says the same proposal will be reintroduced next year.
Now, it seems, charities are facing a greater challenge - surviving tax simplification. The tax reform proposal put forward by US Treasury Secretary Donald T. Regan last month would repeal the CCL.
Smucker says that is bad enough. But, he adds, since the tax-filing process would be simplified, more people probably will choose not to itemize deductions, leaving even fewer people to qualify for charitable deductions.
Also, the Treasury Department's plan would allow taxpayers to deduct only the portion of their contributions which is greater than 2 percent of their gross income. Smucker points out, ''The average American gives 1.97 percent of his gross income.''
In addition, the Regan proposal would change the way gifts of appreciated property, such as stocks, are valued. Jack Schwartz, president of the American Association of Fund Raising Counsel, says this would have a major impact, since as much as half of the large gifts for ''major capital projects,'' such as colleges and museums, come in this form.
Smucker says these three factors in the Treasury proposal would greatly reduce the incentive for charitable giving.
Charles T. Clotfelter, vice-provost of Duke University, conducted a study for Independent Sector on the impact of the Treasury proposal on charitable giving. If implemented in 1985, individual giving would fall by 20 percent, from $59.5 billion to $47.7 billion, he estimates.
In addition to the Regan plan, there are other tax-simplification proposals under consideration in Washington.
US Rep. James M. Shannon (D) of Massachusetts says, ''All (tax) discussion poses some threat to charitable giving, because anytime you talk about tax simplification or lowering tax rates, you're talking about reducing the incentives to give. It's important for these groups to focus (their efforts) now. In light of the government budget squeeze, greater demands are being made on them, while there are fewer incentives for people to give.''
Mr. Shannon says congressmen are sensitive to the needs of charitable organizations. But with the budget crunch, he warns, they have many ''conflicting priorities.''
Steve Delfin, a spokesman for United Way of America, says his organization is willing to lead ''a very strong lobbying effort'' to counter the impact of any tax reform on charitable giving.
''The public good is being served by charities,'' asserts Smucker. ''That argues for retaining charitable deductions.''