If ever there was a year to lend a hand to the state’s nonprofits — everything from community centers and homeless shelters to pandemic-shuttered arts organizations — this is it.
Yes, this is the year to write the check. And what better way to encourage people to write that check than to give them a modest state tax deduction in return. Taxpayers benefit. Charities benefit. What could be better — and easier?
But that will require members of the Legislature to go along. For the state, it means a revenue hit of only about $64 million a year. But for the nonprofits and the community members they serve that stand to benefit, it can represent a lifeline.
“Thousands of nonprofits are on a fiscal cliff right now,” Jim Klocke, CEO of the Massachusetts Nonprofit Network, said in an interview. “Some that got PPP [Paycheck Protection Program] loans have run out. Many nonprofits kept doing what they usually do, like running after-school programs, and then they did some more, like opening soup kitchens. . . . This is just the right time to reinstate this [charitable] deduction.”
The long and torturous history of the charitable deduction in Massachusetts goes back to 2000, when voters approved the ballot measure by a 72 percent to 28 percent margin. But in 2002 the Legislature put the measure on hold until the state hit a certain number of economic triggers — the same ones that eventually reduced the state income tax back to 5 percent. That should have happened as of Jan. 1, 2021, but lawmakers delayed it a year.
When Governor Charlie Baker filed his budget back in January for the fiscal year that began July 1, he proposed another year’s delay. In the midst of the pandemic, the administration was doing everything but checking the seat cushions for spare change. Flash forward six months and the state is now awash in unexpected revenue — but lawmakers still wanted to hang on to that additional $64 million.
Last week, when the budget reached his desk, Baker vetoed the delay, noting in his veto message, “the combination of strong state revenues and serious needs facing nonprofits and charitable organizations necessitate this tax deduction’s going into place.”
He’s right — not to mention it was the will of the voters, who have been asked to wait more than two decades to see it implemented.
Klocke has been surveying his organization’s 700-plus members throughout the pandemic. In the most recent survey, 60 percent of respondents reported revenue loss with an average drop of 34 percent over the past year.
Do the wealthy benefit from the charitable deduction? Sure, and lots of organizations depend on their wealthy donors for support. But the deduction would also be a boon to some 627,000 low- and middle-income taxpayers because, unlike the federal deduction, the state deduction is universal. That figure, Klocke noted, is based on actual filers who deducted federal charitable contributions before the law changed in 2017.
Here taxpayers don’t have to itemize all deductions to collect — just write a check for $500 (or several checks), and get back $25.
Small donors make up the backbone of many nonprofits. Some 80 percent of MNN’s members rely on individual donations to support their work.
In a perfect world, government would do more too — although this year it would be hard to fault this state and this particular budget. The Massachusetts Cultural Council, for example, got $21.4 million. According to MassCreative, that’s “the largest public investment in arts and culture since Fiscal Year 2002.”
Many programs run by nonprofits that deal with domestic violence, mental health, and substance abuse also found greater support in this year’s budget.
But nonprofits have always depended on a combination of resources, and reinstating the charitable deduction would help keep the private tap flowing.
The Legislature can do its part by letting the governor’s well-timed veto of yet another year-long delay stand.
Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.