Uncertainty Over Tax Changes Could Impact Holiday Giving

Political uncertainty over federal tax provisions that affect charity have nonprofit groups worried about a drop in donations during the traditional giving season, USA Today writes.

Congress has yet to act on the estate tax and a tax break for older Americans who withdraw money from their individual retirement accounts to donate to charity, both of which expired last year.

In addition, overall income tax rates could rise on Jan. 1, the cut-off date for the reductions enacted by the Bush administration. If the Bush cuts are allowed to expire, charity deductions would be more valuable next year than they are now.

Many large charities get the biggest chunk of their funding in the fourth quarter as donors rush to contribute by year’s end to claim tax deductions. But as long as the tax issues stay up in the air, wealthy donors will be reluctant to make large gifts, said Diana Aviv, chief executive of Independent Sector, a coalition of nonprofit groups.