Proposed limits on tax deductions for charitable donations worry leaders of nonprofits, philanthropy groups
Marca Bristo, president and CEO of Access Living, says the Illinois budget crunch has forced her organization, a service and advocacy group for people with disabilities, to court more individuals for support
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| {photo: Marca Bristo, president and CEO of Access Living, on Friday, October 28, 2011. (Chris Sweda, Chicago Tribune)} |
A hot topic on the agenda is the idea of limiting tax deductions for charitable donations. Current tax law allows individuals making more than $200,000 to take a 35 percent tax break on charitable gifts; the Obama administration has proposed reducing that write-off to 28 percent.
The idea deeply worries Diana Aviv, president and CEO of conference host Independent Sector, an industry group. The fallout would be devastating, Aviv contends, citing studies that estimate a $7 billion hit to nonprofits.
"The individuals, families and communities served by America's nonprofits will be the ones who suffer from a further decrease in giving," she said.
Meanwhile, belt-tightening by donors and slashed government budgets have left many organizations scrambling to carry out their missions and others struggling to survive.
Marca Bristo, president and CEO of Access Living and a conference speaker, said the Illinois budget crunch has forced her organization, a service and advocacy group for people with disabilities, to rely less on government dollars and court more individuals for support:
Q: What are the threats to nonprofits, given the public budget crunch?
A: Ninety-three to 98 percent of (human service) organizations have been impacted negatively by the state's budget cuts and through delayed payments. Some organizations are closing. Most have either had to lay off staff and skip payrolls, put staff on furlough days and freeze wages, or other things like that. (Unlike) the boards of large arts organizations and hospitals, the boards of groups that perform human services typically don't have as much access to the private resources and (the corporate executives) who sit on their boards. Their balance sheets historically haven't had a lot of wiggle room.
Many are finding they've developed relationships with banks over the years where they can use a line of credit. What is happening now is that the state — one of their major funders — is no longer seen as a good credit risk. Many banks are refusing to give them a line of credit. That's making them more vulnerable.
Q: What about Access Living specifically?
A: We've been very, very aggressive about our fundraising, so we've been able to minimize the impact on our programs because of that And by having a diversified funding base, we weren't dependent on a single source. But like everyone, we're experiencing cuts from some foundations, and we've lost some contributions from corporate donors who are cutting back.
We've tried to build our individual donor base, because that was our weakest component. We went to a longtime anonymous donor (who) elected to assist us in a wise way by giving us a $1 million challenge grant for donors who could give us $1,000 or more. Since January, we've been doing something that we've never had time to do: meet new people, get them in here and tell them our story. Now, to meet our challenge grant over the next three years, we'll have to raise (more than) $330,000 per year, and that's a big stretch for us. (This year) we're at just about $270,000. This is hard work, because individuals are being hit by the economy, too, and many of them are hunkering down.
Q: How has the economy affected donors' decisions?
A: I measure my progress by whether we get the job done. The other part of advocacy is degree of engagement in our community. Do I see an expanding number of people getting involved? Are we practicing what we preach by empowering people with disabilities to get involved? Do I have more people coming to our organizing efforts than I did six months ago? We have an internal measure that nobody on the outside asks about. We ask our staff to share with us quarterly what they are most proud of; I wish funders asked us this. Another way we judge our success is by client feedback. We do satisfaction surveys that tell us what people think of us.
Q: How would a new cap on the charitable deduction affect nonprofits such as Access Living?
A: It would devastate organizations like ours. We rely very significantly on charitable contributions. Let me also be honest: We are not somebody's first charity. They'll go to whoever they see to be their primary charity. This is true for so many of the smaller organizations around. Any organization that is not the major player but midsize and smaller, we're very concerned.
#Source: Chicago Tribune By Corilyn Shropshire
http://articles.chicagotribune.com/2011-10-30/business/ct-biz-1030-philanthropy-outlook-recipient-20111030_1_nonprofits-budget-crunch-tax-deductions
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