Charitable deduction is critical for nonprofits and communities

Jill Michal

is president and CEO of United Way of Greater Philadelphia and Southern New Jersey

If our national economic downturn has left the nonprofit community with one lesson, it's that the "new normal" means doing more, for more, with less. And just when it seemed safe to start putting the economic recession in our rear-view mirror, fiscal cliff negotiations have left the nonprofit sector at risk of taking yet another hit - this time to the vital funding that comes from generous individuals willing to invest some of their hard-earned dollars into improving their communities.

Several proposals have been floated in Washington to impose either a dollar limit or a percentage cap on the charitable deductions millions of Americans receive in exchange for their generosity each year. But these proposals would remove a critical incentive for giving, which directly impacts nonprofits' ability to address our community's most persistent challenges - issues like the high-school drop out rate, unemployment and underemployment, and health issues that affect children, adults, and seniors.

Restricting this deduction could lead to staggering consequences for nonprofits and our community. Consider the impact the following generosity has had on the lives of people throughout our region:

More than 80 percent of Americans claimed the charitable deduction in 2009, and these individuals and families were responsible for more than 76 percent of individual contributions to charitable organizations.

In 2010, 1.9 million Pennsylvania residents filed returns with more than $5.8 billion in charitable deductions (with an average contribution of $3,048).

In New Jersey, 1.8 million residents filed returns with more than $5 billion in charitable deductions (with an average contribution of $2,730).

This kind of individual generosity has made a world of difference in nonprofits' ability to offer continued support to those who need it most. At a time when individuals and families are still recovering from the recession, capping the charitable deduction is not only poor logic - it would deliver yet another hardship to our most vulnerable.

United Way of Greater Philadelphia and Southern New Jersey urges public officials in Washington to remember just how critical the charitable deduction is to the nonprofit sector and to stand up for programs that improve our communities, help meet basic needs, and provide educational and employment opportunities.

Please preserve the charitable deduction's powerful incentive for giving.