As lawmakers continue to wrestle with options to reduce the federal deficit, philanthropic leaders are finding themselves defending the status quo. Recently, the Senate Finance Committee received testimony from philanthropic leaders and researchers on incentives for charitable giving and options for tax reform. Although the panelists were prepared for specific questions from committee members, I wonder if others in the philanthropic sector are prepared to respond to this line of questioning.
It is unfortunate that the philanthropic sector has to defend its tax-exempt status because we need policies that increase charitable giving, not decrease it. That philanthropic leaders are on the defense is an indication that government officials just don't understand the valuable role of philanthropy in our nation. As philanthropists, we are proud of our contributions to society, and we should not shy away from stating our position on policies that discourage giving nor should we compromise our principles. If we don't defend philanthropy and educate lawmakers now, we'll face future proposals that diminish philanthropic investments in exchange for boosting federal tax collections.
As deficit reduction talks continue, the conversation is only expected to grow more intense. Though previous proposals to cap the charitable deductions rate have become law, the newly estimated $400 billion the cap would raise over 10 years may make the proposal more palatable to lawmakers.
If that's not reason enough to get your talking points together, the president has recommended that the supercommittee tasked with reducing the federal deficit cap all itemized deductions. That's why it's important that philanthropic leaders are informed and prepared to speak to the value of philanthropy. As we say in Washington, D.C., if you're not at the table for budget negotiations, then you're likely to be on the menu as an option for revenue raisers.
Chatrane Birbal is director, government relations at the Council on Foundations.