Charities Plan Deluge of Letters on Deduction Cuts

A coalition of three major charitable organizations, led by United Way of America, plans to inundate the White House and Capitol Hill with more than a million letters this month protesting the Treasury Department’s proposal to cut tax deductions for charitable donations.

The unusual campaign by the charities, underscoring the difficulties facing the Treasury’s tax simplification proposal and a growing political activism by nonprofit groups, will include personal appeals to President Reagan and members of Congress by prominent volunteers.

The United Way, a coalition of 2,200 local campaigns, will be joined in the effort by the Federation of Jewish Councils and Independent Sector, an umbrella organization of 300 charities and 300 of their major corporate and foundation donors.

In addition, on Jan. 28 and 29, Independent Sector plans to rally hundreds of supporters from around the nation, who will then visit the Capitol Hill offices of their hometown congressmen to lobby against reducing tax benefits for charitable gifts.

The campaign is significant because of the enormous resources that charities potentially can bring to bear to influence government policy, and their increasing willingness to do so.

Charities are not permitted to engage in partisan political activities, but federal tax laws allow them to use from 15% to 20% of annual donated revenues in attempts to influence administrative and legislative decisions.

As part of a broad tax simplification plan, Secretary of the Treasury Donald T. Regan has proposed ending the charitable deduction for taxpayers who file short-form tax returns, and allow those who itemize only to take a deduction for donations in excess of 2% of adjusted gross income.

Regan also proposed ending deductions on the appreciated value of gifts of property, such as stocks. This would have a major impact on colleges, hospitals and private and community foundations, which get much of their money from large bequests and gifts.

Independent Sector estimates that charitable giving by Americans could drop 20%--from $59.5 billion in 1984 to $47.5 billion next year--if the proposals are enacted. Even the Treasury Department acknowledges that giving would decline by nearly $10 billion. United Way estimates that its revenues, $2.1 billion last year, could drop between $260 million and $367 million.

Calls Reagan Scrooge

Independent Sector President Brian O’Connell, who just before Christmas called Regan a “Scrooge,” said Friday: “The contradiction here is there has never been a President who says he is more supportive of the work of voluntary organizations, but who is allowing others in his Administration to almost viciously attack the capacity of voluntary organizations to do their business.”

Mark Talisman, who runs the Council of Jewish Federations office in Washington, said that charities must persuade the President and Congress that giving money to charity is not “just another loophole” in the tax laws but provides a benefit that relieves government of burdens.

A spokesman for United Way of America labeled the Treasury proposals “radical” and noted that when the modern income tax was adopted in 1917 the only deduction allowed was for gifts to charity.

“We believe every single charity in America is in agreement with us on this issue,” the United Way spokesman said, adding: “We are not against tax reform or tax simplification, but these proposals would do serious harm to all nonprofits.”

The average American gives 1.97% of adjusted gross income to charities, including churches, Independent Sector estimates.

Valuations Inflated

Regan’s office has said that it believes tax benefits are not a significant factor in such modest giving, that the deduction for taxpayers filing the short form is prone to abuse and that the valuations applied to gifts of property that has appreciated are often inflated.

“Treasury is saying people don’t give because of tax policy, that they give because of the goodness of their hearts and that is absolutely true,” O’Connell said.

“But what Treasury is not telling the President is that tax policy influences the size of gifts,” O’Connell said. He said tax breaks cause Americans to give 31% more than they would otherwise.

The Treasury Department did not respond to a request for comment on the charities’ letter writing campaign.

American nonprofit organizations--including hospitals, universities and other tax-exempt organizations that charge fees for services--are an enormous, though little recognized, enterprise. They had total revenues of $202 billion in 1984, Independent Sector estimates, and employed more than 8 million people.

The letter writing and lobbying campaign illustrates the growing awareness by charities of how government actions affect nonprofit groups.

United Way of America moved its headquarters from Manhattan to suburban Washington in 1970, and the Council of Jewish Federations, whose 200 local campaigns raise more than $600 million annually to support more than 6,000 charities, opened a Washington office eight years ago.

In recent years the voluntary groups have become more politically energized in the face of a series of major setbacks.

President Reagan has repeatedly called for expanded private-sector initiatives, saying that “volunteerism is an essential part of our plan to give government back to the people.” But under Reagan’s first three budgets, government grants to nonprofit organizations were cut $14 billion, the Urban Institute estimates. Bulk nonprofit mailing rates have increased 57% and would double under proposals expected to be included in Reagan’s new budget package.

In addition, nonprofit groups were required to join Social Security last year, adding about 6% to their labor costs and reducing the take-home pay of employees.