Blog Categories
Past Posts

Chipping Away at the Nonprofit Tax Deduction

Part of the Fiscal Cliff deal struck by President Obama with Congress was more taxes to be paid by those earning over $300,000 a year. The way this compromise was arrived at has caused some concern among nonprofit leaders. Especially those leaders of larger nonprofits: Universities, hospitals, museums and other arts institutions with relatively large budgets (at least $5 million a year) that have significant development staff and attract substantial annual gifts from wealthy individuals.

In a recent article in Forbes Magazine the author explains how the change will work. Persons earning over $300,000 will have to choose how they will take their deductions, because they will be limited. For each $100,000 earned over the first $300,000, 3% (or $3,000) is removed from the deduction and essentially becomes part of the tax cost. For those earning millions, that can be a substantial amount. And the potential impact on charitable giving…the disincentive to donate because of the tax implications…can be significant. Small-to-midsize nonprofit organizations will likely not feel much of a squeeze as a result of this change in tax policy. But the big nonprofits will likely feel the pain in 2013.

Post to Twitter


Leave a Reply