Special Report: U.S. Senate Finance Committee Holds Hearing on Charitable Giving Tax Deduction

Yesterday, the U.S. Senate Finance Committee held a hearing on the charitable giving deduction and the various proposals to alter the deduction. You can find testimony from the hearing here:


Of greatest interest was the Congressional Budget Office’s testimony that indicated the potential harmful effects of proposals that would change the deduction (please see the table on page 2):


The Committee discussed various proposals such as implementing the Obama Administration’s proposed 28 percent cap on itemized deductions, replacing the deduction with a tax credit and imposing a floor that would only allow a tax break for charitable contributions that exceed two percent of adjusted gross income.

The Association of Fundraising Professionals has concerns about the proposals because all of them, as discussed, would have a negative impact on giving. A recent study reported in The Chronicle of Philanthropy suggests that the imposition of the 28 percent cap would reduce charitable giving by $2.9 billion to $5.6 billion. A study also indicated that a 12 percent tax credit could decrease donations by $9.7 billion to $24.6 billion. In its testimony during yesterday’s hearing, the Congressional Budget Office estimated that a deduction floor of two percent of adjusted gross income would result in the loss of $3 billion in charitable contributions.

Sen. Orrin Hatch (R-UT), ranking member of the Senate Finance Committee, echoed AFP’s concerns during the hearing when he stated that “from my perspective the tax reform options being discussed today are options that target charitable giving concocted by those who, hungry for more taxpayer dollars to finance reckless government spending, are now casting their sights on the already depleted resources of charities and churches.”

It is worth noting that a floor for deductions (either two percent of adjusted gross income or $500 for individuals and $1000 for families) was discussed many times. So, we likely will be confronting both the cap and a floor from here on out.

To give voice to the nonprofit sector during this debate, AFP has launched the Engaging Networks platform that will allow folks to contact their Members of Congress online. Whether or not you are an AFP member, you can send your own letter using the platform here:


I want to thank Jason Lee, AFP’s General Counsel, for granting his permission for me to share the above information, for his tireless work on this issue, and for launching the Engaging Networks platform.

That’s what Michael Rosen Says… What do you say?

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