March 16, 2011

Tax Proposals Worry Hospital Fund Raisers

Hospitals could lose more than $1-billion in donations if Congress limits charitable deductions, hospital fund raisers estimated in a new survey by the Association for Healthcare Philanthropy.

A poll conducted last month of 317 fund raisers who belong to the association asked about a proposal to reduce the deduction for charitable contributions to a 12-percent tax credit for donations. The credit would be available only for amounts beyond 2 percent of a taxpayer's adjusted gross income.

Nine out of 10 fund raisers said the proposal—which was recommended by President Obama's deficit-reduction bipartisan committee—would cause "significant" decreases in total contributions.

Meanwhile, the White House has also proposed limiting write-offs, including those for charity, to 28 percent for taxpayers in the highest brackets.

Sixty-one percent of fund raisers said if tax breaks for giving are limited, they expect donations to drop by 10 to 19 percent.

"What our members are saying is that 'we're nervous about this,'" said Bill McGinly, president of the Falls Church, Va., association, which represents 2,000 nonprofit hospitals and medical centers. "If the tax deduction is reduced, the dollar amount is going to follow suit from donors."

Especially with large gifts, "donors want to know [about their tax liability]," Mr. McGinly said. "They are very intelligent about taking advantage of the tax deduction. We know full well that they don't make their gifts based on the charitable deduction, but the size of their gifts is influenced."

Mr. McGinly says the association plans to meet soon with lawmakers to discuss the survey's findings.