Key Message Points on Proposals to Cap or Eliminate the Charitable Deduction

• Charitable donations help colleges and universities achieve their teaching, research and public service missions. According to the Council for Aid to Education's Voluntary Support of Education (VSE) Survey, donors contributed about $28 billion to colleges and universities in 2010.
• As the climate for giving to education has improved, the VSE Survey found that giving to colleges and universities increased by 0.5 percent over the previous year. Adjusted for inflation, giving to higher education actually declined 0.6 percent.
• As federal and state governments continue to cut funding for higher education, raising private support from individuals has become even more crucial for colleges, universities and independent schools.
• Proposals that would reduce the value of charitable deductions for certain donors or eliminate the deduction altogether represent a step in the wrong direction. As colleges, universities and independent schools struggle to meet increased demands for their services with shrinking resources, we need to encourage all individuals, regardless of income and wealth, to give to charity.
• According to a 2010 Bank of America Study on High Net-Worth Philanthropy, high net-worth households (household income greater than $200,000 and/or net worth of at least $1 million) give between 65 and 70 percent of all individual giving in America. These are the taxpayers who have the resources to give to charitable causes consistently, and U.S. tax policy should encourage them to continue to give generously.
• Studies indicate that donors give for many reasons-incentives such as tax deductions are among them. While donors would continue to give if the charitable deduction is reduced or eliminated, it will likely affect the timing and size of their gifts. The 2010 Bank of America study also found that 67 percent of wealthy households would somewhat or dramatically decrease their charitable contributions if they received zero income tax deductions for their charitable contributions.
• Americans want the charitable deduction. In an April 15, 2011, Gallup poll, 71 percent opposed eliminating the charitable deduction to lower the overall income tax rate, and 68 percent opposed eliminating the charitable deduction to reduce the federal budget deficit.
• The charitable deduction is unlike other itemized deductions because it encourages people to voluntarily give away their money for the benefit of others. If anything, incentives for this type of behavior should be enhanced, not limited.
• Again, we urge you to oppose any proposal that would reduce the value of or eliminate the charitable deduction.