Charities fight bid to cap gift deduction

Call on Kerry to oppose plan

Paul Grogan of the Boston Foundation called the cap penny wise and pound foolish. “Some of the  biggest economic engines we have  [in Massachusetts] are nonprofits  - educational, medical, and cultural,” he said.
Paul Grogan of the Boston Foundation called the cap penny wise and pound foolish. “Some of the biggest economic engines we have [in Massachusetts] are nonprofits - educational, medical, and cultural,” he said.

The Boston Foundation and three other major local nonprofit organizations yesterday urged Senator John F. Kerry to oppose the cap on tax deductions for charitable giving by wealthy donors that President Obama has proposed.

The Massachusetts nonprofits are joining hundreds of charities nationwide in lobbying against any changes to the tax code that could reduce incentives for charitable giving, saying organizations across the country stand to lose as much as $7 billion a year if the president’s cap on deductions is adopted.

“In Massachusetts, charitable giving is particularly important,’’ said Paul Grogan, president of the Boston Foundation and one of the four signers of a letter sent to Kerry yesterday. “Some of the biggest economic engines we have are nonprofits - educational, medical, and cultural.’’


The presidents of the United Way of Massachusetts Bay and Merrimack Valley, Catholic Charities, and Combined Jewish Philanthropies of Boston also signed the letter.

The president proposed the cap as part of his 2012 federal budget submission, which must be approved by members of Congress. The letter-writers targeted Kerry, a Democrat, because he is on the congressional bipartisan super committee that will recommend ways to reduce the federal deficit.

The committee, appointed earlier this year, is due to report its proposals by Nov. 23.

Kerry’s office declined to comment on the letter.

Robert Beal, a Boston real estate developer who was involved in courting support for the letter, said he would rather see an increase in income taxes on people earning more than $1 million than a limit on charitable deductions.

“It’s one thing to say we’re going to increase your taxation. But let’s not do something that’s going to have a dramatic, overwhelming impact on charitable giving,’’ said Beal, who is a major donor to Boston charities. “This could have an enormous impact in Massachusetts. We are the university capital and medical capital of the world, and what do these institutions do all the time? They’re raising money. This could dramatically impact the economy as well as small charities.’’


Separately, the Massachusetts Nonprofit Network, a Boston-based group that advocates for charitable organizations, has been pressing its members to write lawmakers to oppose the cap on tax deductions. The group said that 1,500 nonprofits nationwide have urged their lawmakers to reject the president’s proposal.

Charitable giving by individuals, foundations, estates, and corporations in the US totaled $291 billion in 2010, with individual donors giving nearly three-quarters of that, or $212 billion, according to the congressional Joint Committee on Taxation.

Under current law, the wealthier the individual, the larger the tax break. For example, a $1,000 donation by a taxpayer in the 15 percent bracket making $28,500 yields a tax break of $150. That same $1,000 donation for a person in the 35 percent tax bracket, reporting $479,150 of taxable income, nets a $350 tax break.

Obama’s 2012 budget proposal would cap tax deductions at 28 percent for families earning more than $250,000 or individuals earning more than $200,000.

The provision would generate an estimated $321 billion in additional taxes over 10 years, according to Independent Sector, a Washington group that lobbies on behalf of nonprofits.

But Grogan called the proposal “penny wise and pound foolish.’’ Nonprofits, including the Boston groups, argue that given the state of the economy, it’s the wrong time to make charitable giving less attractive. Less money going to charities would hurt the poor, not the wealthy, they argue.


“We understand the challenges facing Congress and we support efforts to meet those challenges, but we do not believe that low-income individuals should suffer the dual burdens of reductions in philanthropic resources and government services,’’ the letter to Kerry said.

Wealthy donors tend to give more to education, and medical and arts institutions, according to research from the Joint Taxation Committee, which is to be presented at a hearing today in Washington before a Senate committee.

Nonwealthy donors tend to give more to religious organizations, the Joint Committee reports. Religious organizations received the largest share, 35 percent, of all donations in 2010, according to the paper.

Today’s hearing will also feature testimony from heads of nonprofits and religious institutions, including United Way Worldwide’s chief executive, Brian A. Gallagher.

Beth Healy can be reached bhealy@globe.com.