Tax incentives make more and larger gifts possible, and they do have an impact on donors. A recent 2012 study found that 33 percent of donors surveyed would reduce their giving if the charitable deduction did not exist. A survey conducted earlier this year showed three out of four Americans say they do not favor cutting, capping or limiting the charitable tax deduction

President Obama wants to limit tax deductions on charitable giving by the wealthy, those who give an estimated one-third of all charitable gifts. He thinks that capping or cutting the tax deduction on gifts will help the nation avoid the “fiscal cliff.”

Nonprofit leaders oppose such a move.

“President Obama and Congress are considering caps or cuts to the 100-year-old tax benefit for those who give to charities and redirecting these dollars to federal coffers,” wrote Larry Snyder, president of Catholic Charities USA, and Brian Gallagher, president and CEO of United Way Worldwide.

Writing in U.S. News & World Report, they said, “Doing away with the charitable deduction at a time when people are still reeling from the recession and facing the consequences of government cutbacks is bad timing and bad logic.”

They pointed out that in 2011 Americans gave some $300 billion to organizations that provided social services, did medical research and provided food – to name only a few of the areas where nonprofits work.

Snyder and Gallagher argued that “the charitable deduction is different than other itemized deductions. It encourages giving, rewards a selfless act, and helps raise more for charities than would have otherwise been possible. Data suggests that for every dollar a donor gets in tax relief, the public typically receives $3 of benefit. No other tax provision generates that kind of positive public impact.”

Snyder and Gallagher are members of the Charitable Giving Coalition (CGC), which will have leaders in Washington, D.C., on Dec. 4-5, to bring “a dose of reality” to elected officials inside the Beltway.

In mid-November, the CGC wrote Obama expressing deep concern about the negative impact of changing the charitable deduction.

“[W]e urge you not to impose any limit or cap on the charitable deduction, including your proposed cap limiting all itemized deductions at 28 percent for certain taxpayers. We request an opportunity to brief you and your staff on the impact a proposed reduction to the charitable deduction would have on those we serve,” reads the letter.

“People give to worthwhile causes for many reasons – incentives such as tax deductions being among them.,” said the message.

The letter added: “Tax policy experts have also noted that charitable giving is more sensitive to tax changes compared to other deductible payments such as local taxes and mortgage interest because taxpayers generally cannot adjust or modify their local taxes or mortgage payments. However, taxpayers can adjust their levels of charitable contributions quite easily in response to tax code changes.”

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