Capping the Charitable Gift Deduction

With all the ego, all the cross-talking, and aggressive posturing during the debates, you may find it surprising that both our presidential candidates agree on at least one thing – capping the charitable gift deduction is a good idea.

As one might guess, non-profit groups – armed with studies that highlight how injurious such legislation would be to giving totals –  are campaigning hard to stop any repeals or caps related to this important deduction.

And while each of us may have an opinion about how the government should or shouldn’t attempt to incentivize the behaviors of the citizenry, I think there is a more important question here.  Namely, if the charitable gift deduction were capped – or better yet, if the charitable gift deduction were thrown out altogether – would your approach to your work change?  In other words, if there were no tax incentive for people to give your institution money, would it impact how you think about advancement and development?

Sure, there is the easy part of thinking about a world with no tax-advantaged giving.  We would remove all language about gifts being tax deductible in all solicitations.  You can envision that we would have fewer issues around receipting gifts since donors wouldn’t need them for tax purposes.  But those are just some of the tactical issues.

I’m asking a different question of you.  If the government said, “there will be no tax-advantage to giving,” how would you encourage people to give?

Perhaps we would lean even more heavily on the importance of mission and vision.  Of getting to understand fully our donors’ interests and values.  Of aligning our institution’s giving opportunities with our donors’ passions.  Perhaps we would view our development work as relational as opposed to transactional since an important component of the transactional model would be gone.  Perhaps we would be forced to become more authentic in our efforts in the philanthropic vineyard.  While it might mean our results would be depressed, perhaps we would, somehow oddly enough, become better.

Capping the charitable gift deduction may in fact reduce giving in the short term.  But maybe it would cause our profession to renew our commitment to mission-centered fundraising which would be good for our institutions and our donors.

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