Obama tax plan may hurt philanthropy

A proposal in President Obama’s budget to lower the tax deduction amounts for wealthy donors has charities concerned that it may reduce giving.
MAR 04, 2009
By  Bloomberg
A proposal in President Obama’s budget to lower the tax deduction amounts for wealthy donors has charities concerned that it may reduce giving. The proposal would limit the tax rate at which high-income donors could take itemized deductions to 28%, from 35%. The measure has divided fundraisers about whether the lesser deduction would result in less giving, according to an analysis published by the Chronicle of Philanthropy in Washington. “Most people give appreciated securities, so we know giving is already going to be down this year,” said Eileen Heisman, president and chief executive of the National Philanthropic Trust. The national donor-advised fund program, based in Jenkintown, Pa., had $620 million in assets as of Dec. 31. “This tax proposal is going to make it worse, but we don’t know how much worse,” Ms. Heisman said in an interview. Under current law, if donors who are in the 35% tax bracket give $100,000 to charity and can deduct the entire gift, they will reduce their income taxes by $35,000. Under the Obama proposal, they can deduct their gift only at the 28% rate, reducing their taxes by $28,000. The Obama plan wouldn’t affect high-income donors who were subject to the alternative minimum tax and were therefore already in the 28% bracket. Ms. Heisman said she hopes for the best. She noted that when the government has reduced the capital gains tax, many thought that donations would decrease because people weren’t saving as much. “But people kept giving,” Ms. Heisman said. At least one other fundraising executive agrees. “While it’s a bit early to comment on this proposal until we have more details, we know that Americans have historically been quite generous in supporting charities that are important to them, and we expect this to continue,” Sarah Libbey, president of the $3.8 billion Fidelity Charitable Gift Fund, offered by Boston-based Fidelity Investments, wrote in an e-mail. Still, the weak economy could make this year different. “Taxes are not the reason why people decide to give, but they do count for something,” Ms. Heisman said.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.