Since a stroll off of the fiscal cliff now appears more likely as pre-Christmas negotiations ended without an agreement, I thought I’d bring you a brief roundup of what such an event may mean to nonprofits from sector experts far more prescient than this blogger.
To put it in simplest terms, nonprofits are concerned with the cliff because going over it will trigger caps on itemized deductions, including charitable donations, likely resulting in a decrease in donations, and therefore overall revenue, to their organization. In a time of increased need and decreased government funding (likely to drop more in the face of additional cuts), this is a potentially serious situation.
- Doug Donovan at The Chronicle of Philanthropy lays out the situation as of late last week, highlighting some concerns from nonprofit leaders on how any agreed-to cap on charitable deductions may be dismantled or adjusted in the near future.
- The National Council of Nonprofits (via GiveVoice.org) has an infographic illustrating the imminent dangers of the fiscal cliff for nonprofits. The display summarizes the importance of charitable deductions to nonprofit operations and suggests that a cap will decrease giving and may increase government costs.
- NonprofitCommunity.com offers up the opinions of several of the Wiley and Jossey-Bass authors whose perspectives range from the prediction that this will be a catastrophe for many recession-weakened nonprofits, to advice to keep calm and soldier on with your mission and sharing your story to increase support in the community, to the view that this crisis will force real innovation in a sector that has gone too long without it.
- Blue Avocado’s Jan Masaoka reminds nonprofits of the larger issues of the “cap battle” such as tax fairness and the common good versus their own revenue.
There is a chance that after the 26th, dueling proposals and related negotiations will be revisited and all of the hyperventilating will be moot. Or maybe not. Do you think donations to your nonprofit will decline substantially if a federal cap on deductions is enacted? If so, how do you plan to face this change?