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Local agencies worry about deduction cuts
As a result of fiscal cliff
Wednesday, December 5, 2012
By PAUL COLLINS - Bulletin Staff Writer
Officials with several local nonprofit agencies, colleges and church/religious organizations are concerned that if Congress limits tax deductions for charitable contributions to help avoid the fiscal cliff, their organizations could lose donations.
“We know the main reason people give is they believe in what we do,” said Patrick Henry Community College President Dr. Angeline Godwin. “They believe in the college. They want to make an impact in the community” and they know the college educates and helps train the work force.
But charitable tax deductions are an extra encouragement for people to give, to give more and give more often, Godwin said.
PHCC uses private dollars to, among other things, help leverage other funds and keep tuition low, she said. She said as of June the PHCC Foundation, which raises private funds for the college, had $12.7 million in charitable assets.
Tiffani Underwood, executive director of the United Way of Henry County and Martinsville, said she is concerned that if the deductions are limited, “it could hurt nonprofits in the community.”
With the United Way struggling to reach its annual campaign goal, any losses in donations would hurt not only United Way but also the programs and services that United Way supports at various community agencies, Underwood said.
“I just really hope they don’t do it” (limit charitable deductions), she added.
Brad Kinkema, executive director of Martinsville-Henry County Family YMCA, said a lot of people give because of philanthropy, combined with the tax benefit. “You take away that benefit, they might think twice” about donating, he said.
“Nonprofits have a difficult time enough. ... Add on one more thing, and it makes it more difficult for them to operate,” he said.
Ralph Lawson of the American Red Cross also noted the importance of donations to nonprofits — and the importance of nonprofits to the public.
“We understand the nation has to deal with the deficit and the fiscal cliff, but many Americans rely on the charitable sector, especially during tough economic times. We are very concerned about proposals that could jeopardize gifts that are so important to nonprofits,” he said. He is the community chapter executive of the American Red Cross Piedmont Virginia Chapter, covering Martinsville, Henry and Patrick counties, Danville and Pittsylvania County.
Some people don’t realize that the Red Cross is a nonprofit, not a government agency, Lawson said. The Red Cross’ work across the country depends on charitable gifts, and anything that would hurt that would not be good, he said.
Kathy Rogers, executive director of Piedmont Arts Association and former executive director of the local United Way, said such a change would hurt both organizations.
Limiting charitable deductions could hurt donations to Piedmont Arts, she said. She said she hopes major donors give because they think it is a worthwhile organization and want to help the community, but she realizes the tax benefit also may be a factor.
At PAA, nearly 25 percent of the budget, or $150,000, comes from individual contributions, she added.
Leslie Hervey, executive director of the Martinsville-Henry County SPCA, said limiting charitable deductions “is really frightening for someone like us.” She said she believes donors would use up their limits giving to charitable organizations that serve people, and that “animals would be left out.”
About three-fourths of the SPCA’s budget comes from charitable donations, she added.
Mary Davis, office manager for the Henry County Baptist Association, said she believes limiting charitable deductions could have a huge impact on local churches, which depend on tithes and offerings from parishioners. She said some churches already are impacted by the weak economy.
The Baptist Press reported that Richard Land, president of the Ethics & Religious Liberty Commission (ERLC), said limiting charitable deductions “would be catastrophic in its impact, particularly on those large gifts that many religious organizations, colleges, universities and ministries, as well as churches, depend upon for continuing operations.” He is a Southern Baptist church-state expert.
The Rev. Keith Spangenberg, pastor of Villa Heights Baptist Church, said he thinks limiting charitable deductions would affect churches less than secular charities because he assumes most giving to the church is motivated by faith and commitment to tithing. But that can vary from church to church, he added.
For instance, he said, giving at his church is consistent from month to month and there’s not a big increase in giving at the end of the year. However, he served a church in Northern Virginia that did not have a lot of tithers and there was a big increase in giving at the end of the year, indicating giving was driven by the charitable deduction, he said. In churches such as that, he said, limiting charitable deductions would have a devastating effect, he said.
Lucy Touchton, marketing manager for Goodwill Industries of the Valleys, said that agency depends heavily on donations — mainly material but also financial — to support training and employment programs for people seeking jobs. Last year, about two-thirds of the funding for those programs came from selling donated items in stores, she said. The agency served more than 75,000 people, she added.
Goodwill believes it would be “very shortsighted” if Congress were to reduce or eliminate charitable deductions, especially if nonprofits are being called on to serve more and more people because of governmental cutbacks, she said.
The agency serves 31 counties and 14 cities in Virginia, including Martinsville and Henry and Patrick counties.
William Wampler, who said he was speaking not as executive director of New College Institute but as NCI being the recipient of private funding from its foundation, said the possibility of limiting charitable exemptions raises questions about what the tax rates will be in 2013 and thereafter, and if people are going to give, should they give now or wait? He said limiting charitable exemptions might result in donors stretching their pledges out over a longer period of time.
Dean Johnston, vice president of investments at Stifel Nicolaus and president of the Boys and Girls Clubs of the Blue Ridge, did not want to speculate on anything Congress might finally approve.
But regardless of what Congress does, he said, “One thing that doesn’t change is the need in this community to help the underprivileged, whether at Boys and Girls Clubs or other charities locally that have a similar mission. We won’t stop helping people who need help.”
The same is true for The Harvest Foundation, according to its president, Allyson Rothrock.
“I’m sure everybody is concerned about the fiscal cliff, and we’re certainly one of those. I’m more concerned about what it would do to the economy. In 2007-08 when the economy was so bad, the foundation cut its administrative budget but not its grants budget. That’s the last thing we would consider,” she said.
“If the fiscal cliff goes south,” and Harvest Foundation has losses in its investments, the foundation would cut its administrative budget first, and “I can give you my word,” the grants budget would be the last thing cut, she said.
Harvest has awarded an average of $8.4 million to $10.2 million annually since it began awarding grants in 2003.