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Have you heard about President Barack Obama's proposal to limit the amount the deductibility of charitable gifts for high-income donors? Many observers fear that by reducing the incentive for wealthy people to give, the nonprofit sector will suffer.

The Nonprofit Quarterly has published a helpful article that tries to separate fact from hysteria. It identifies the following as "myths" that are circulating about the president's proposal:

  1. The president is aiming only at charitable deductions.
  2. The cap will affect all charitable donors.
  3. Charitable giving will be slammed.
  4. Charitable deductions have never been capped before.
  5. All of charity will lose.
  6. This is the wrong signal at the wrong time.

On page 20 of the Spring 2011 issue of In Trust, Washington attorney Marcus Owens told writer Dorothy Ridings that he believes the full charitable deduction is safe for now, since the divided Congress is unlikely to agree on any plan -- especially one that would raise revenue but might hurt charitable donations. Nevertheless, it's helpful to understand the proposal that's been put forward by the Obama administration.

Read the full article in the Nonprofit Quarterly here.


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