Leaders of Centre County non-profits worry some of their funding will dry up if lawmakers agree to a deal that will cap tax deductions, including those for donations to charities.
The proposal the House of Representatives sent to the White House would cap the overall amount of tax deductions that a person could take, said U.S. Rep. Glenn Thompson, R-Centre. Thompson said individuals could choose which tax breaks they want to use, whether for mortgages or charitable donations.
Tammy Gentzel, executive director of the Centre County United Way, said she would expect a decrease in donations from some donors if the legislation passes.
Gentzel said she understands that lawmakers need to balance the budget and increase revenue. But the United Way is already working hard to make up for reduced funding through charitable donations, Gentzel said.
The Centre County United Way helps fund 37 partner organizations that provide healthcare, education or financial stability.
“Charitable donations are the bedrock of what we do as an organization, but obviously, they’re the bedrock of these services,” Gentzel said. “There’s no doubt many of our donors give more because they can deduct those gifts from their federal taxes.”
Thompson said lawmakers’ goal was to use tax reform to generate $800 billion in revenue. He said he doesn’t believe charitable giving will decrease as a result of the proposal to cap tax deductions.
“People give to good causes because it’s the right thing to do, not because they could take a tax deduction,” Thompson said.
Donors support charities they believe in, Thompson said, and nonprofit organizations have a responsibility to communicate their missions. America needs growth in the economy so that people are able to give, he said.
David Brown, a senior lecturer of economics, said lawmakers say they need a combination of increasing revenues and decreasing spending to tackle America’s debt. When people donate goods or services to charities, it decreases the amount of taxes they pay, Brown said.
Capping deductions shouldn’t cause a decrease in giving for most people, Brown said. The wealthiest philanthropists, who don’t give primarily for tax deductions, are most affected, Brown said.
Kathy Smyser, regional communications manager for the Central Pennsylvania region of the American Red Cross, said the Red Cross is concerned about proposals that could jeopardize charitable gifts to non-profits.
“Our work every day depends on the contributions and gifts from our donors,” Smyser said. “Tax law changes that would limit or cap the charitable deduction would hurt these efforts by altering an incentive for individuals or households that give the most to charitable organizations.”
Andrea Boyles, Centre County Youth Service Bureau CEO, said she doesn’t expect a dramatic impact, because the majority of her agency’s supporters are local people who believe in the work it does.
But it’s short sighted to limit deductions for charitable giving, Boyles said. Fewer services will result in bigger problems, she said.
“We’re just going to push the problem down the road in a lot of cases,” she said.