Some people say the legislation enacted at the beginning of the year to avoid going over the “fiscal cliff” will hurt charitable giving, because it limits how much wealthy people can claim in deductions for charitable contributions and other spending when they itemize their tax returns. The Pease Limitation restricts charitable deductions on incomes of more than $250,000 for individuals and $300,000 for couples.
Others say the provisions adopted by Congress to avert the fiscal cliff will increase charitable giving by an estimated 1.3 percent, or $3.3-billion, in 2013. An Urban Institute analysis claims that the boost will come mainly from the decision to increase the top tax bracket from 35 percent to 39.6 percent on income above $400,000 for individuals ($450,000 for married couples). Because the charitable deduction is tied to a person’s tax bracket, those donors will now save $39.60 in taxes for every $100 they give to charity. Their gift will cost them only $60.40, down from $65 under the 35-percent rate. People in the top 1 percent of income distribution will provide almost all of the higher giving, increasing their donations by an estimated 6.2 percent, according to the analysis. The decision to raise the capital-gains tax from 15 percent to 20 percent will provide an additional incentive for people to donate stock or other property that has risen sharply in value. The option of using an IRA to create an endowment was another incentive for people to make donations.
Regardless of how Congress does the math, the needs of most nonprofits are great and getting greater all the time. Donations have been stagnant or down during the recessionary economy while the burdens on these organizations grew. Americans lucky enough to hold onto their jobs also held onto their wallets in 2012, but other Americans were depending on them to make donations.
The truth is that every donation is important. Fortunately, the concept of tzedakah is a defining issue for us as Jews. If at all possible, we give something, because we feel fortunate to be able to honor a sacred obligation. If we have life’s basics, we are willing to forgo a luxury if it means that we can help people who do not. The deduction is nice, but it is the icing on the cake. The real concern is the mission.
Whether it means helping the poor, the elderly, the disabled or the person bridging the gap between jobs, our tradition tells us to be there. Whether the cause is to help the Holocaust generation or the next generation, we have to be there. Whether we help people in Israel or our own backyard, whether we do it in person or by anonymous donation, we have a good feeling.
In the Orange County Jewish community, making donations is everybody’s business. The role of women is expanding in that regard, just as women have gotten involved in so many other endeavors. Since 2007, Women’s Philanthropy, which is part of Jewish Federation & Family Services (JFFS), has raised more than $1 million per year. That means that women, making donations in their own name, have made a huge difference to help people in need. These women also engage in hands-on projects all over the community. (See the cover story on page 32.)
While we focus on powerful women in this issue of Orange County Jewish Life, we encourage everyone – male and female, young and young at heart, comfortable and more than comfortable – to go out and make a difference. Paying it forward is the greatest feeling in the world, whether Congress rewards the action or not.