Shocker: Obama Budget Proposal Likely to Decrease Charitable Contribution by Billions

April 16th, 2010 5:26 PM

Another devastating intended/unintended consequence of the Obama administration's major government expansion: charity organizations (already in deep struggle to weather current economic conditions) will likely experience additional major decline in contributions.

On the April 16 broadcast of Fox Business Network's "Varney & Co.," Rick Dunham, CEO of fundraising consultant Dunham & Company, weighed in on the new budget proposal that would scale back charitable deductions for families making over $250,000.

"Do you think you're going to take a really big hit in terms of lower donations to charities? How big a hit?" host Stuart Varney asked.

"Well the Center on Philanthropy at Indiana University did a study last year to look at the impact of the rise in the marginal tax rate and the capping of charitable deductions at 28-percent and they believe that it'll be about almost a $4 billion hit based on 2006 dollars," Dunham said. "So we're probably looking at about a $5 billion hit."

"That's a sizable chunk of money," Varney said. "There has been some talk that the administration wants to control charitable giving, and direct where your charitable gifts should go, therefore do it through the government and not through private charities. You think there's anything to that?"

Dunham didn't reject the idea out of hand. "I think all the actions kind of lead that direction. Part of the challenge charities are facing right now is they're coming off of two years of a decline in giving to charities," Dunham stated, citing the approximate $12 billion decrease in charitable giving the last two years.

"The government has always encouraged it through the tax incentive. And I think that's been a huge part of giving in America - that the government has stood behind private philanthropy by saying ‘we want you to invest in charitable institutions for the good they do to our society.' And I think that's what they're beginning to undermine."

Varney then turned to Rep. Scott Garrett (R-NJ).

"I think the administration wants to do two things. One is they want to try to control where your charitable donations go for the time being until they continue to squash that down," the congressman argued.

"And just like with health care, the auto industry, they want to control the economy even more - and so the ultimate goal, some would argue, is to say that we're not going to rely on charity anymore for future philanthropic organizations. We're going to turn those responsibilities over to who? The government and so you and I won't be making charitable donations except in the form of paying higher taxes to pay for those programs instead."

Rick Dunham could not agree more.

"I totally agree. In fact Barclays Wealth did a study - there's been four major booms and busts in charitable giving since the 1500's," Dunham said. "The boom comes with wealth generation and business innovation; the bust comes with government intervention and that's exactly what's happening right now."