Incentives for Giving

Charitable Deduction

Federal tax law currently encourages individuals to give to charitable organizations whose missions they support by providing an itemized deduction. The President, Senators, Representatives, bi-partisan commissions, and think tanks have all put forward plans to reduce the deficit that propose changing the charitable giving incentive in one way or another. The National Council opposes any changes that would endanger the ability of nonprofits to serve their communities.

Estate Tax

The federal estate tax is an essential source of revenue for the federal government and serves as an incentive for wealthier individuals to give back to their communities through nonprofit organizations. The National Council of Nonprofits supports President Obama’s FY 2012 Budget proposal to permanently extend the 2009 federal estate tax levels of $3.5 million exemption for individuals ($7 million for couples) and a tax rate of 45 percent.

IRA Rollover

The IRA charitable rollover allowed individual taxpayers older than 70 ½ years to donate up to $100,000 from their individual retirement accounts (IRAs) and Roth IRAs to charitable nonprofits without having to treat the withdrawals as taxable income. Set to expire on December 31, 2011, legislation is pending in the House and Senate to extend and expand the giving incentive to ensure that individuals and communities benefit from the work of charitable nonprofit organizations supported by these gifts.

Food Inventory Donations

The food inventory enhanced tax credit allowed individuals, businesses, and corporations to donate wholesome food to nonprofits and deduct their cost basis plus one-half the difference between their cost and the market value of the donated goods. The value of the credit could not exceed twice the cost basis of the product donated. This giving incentive is scheduled to expire on December 31, 2011. For more information on efforts to restore this giving incentive, please visit Feeding America.

Land Conservation Easements

Under a conservation easement, a landowner voluntarily agrees to donate or sell certain rights associated with his or her property, such as the right to subdivide or develop, and a private organization or public agency agrees to hold the landowner’s promise not to exercise those rights. In exchange, the property tax burden of the land is lowered relative to its value. This incentive, according The Nature Conservancy, helped preserved over 2 million acres as of June 30, 2003. This giving incentive is scheduled to expire on December 31, 2011. For more information on efforts to restore this giving incentive, please visit the Land Trust Alliance.