(New York Times) Nonprofits may face more problems due to the recession. In an effort for the federal government to try to get the deficit under control, debate about the charitable tax deduction–a large incentive for giving–has come about. Diana Aviv, president of the Independent Sector, says that “Pandora’s box was cracked open,” with these new proposals. Charities claim that reducing or eliminating the tax deduction will produce lasting harm for the nonprofit sector, a notion especially troubling when the demand for charities is up. But in Britain, a system called Gift Aid is working just fine. The Bipartisan Policy Center panel suggested adopting a similar plan to Britain, and philanthropic experts are interested. The idea behind the new proposal is that once they receive a donation, charities qualify for 15% of the gift in tax credit. If a donor gives $100, then charities qualify for an extra $15 from the government, giving donors a partial match. The criticism of this system is that it is too bureaucratic, leaving millions of dollars unclaimed. Director of research for the Center for Economic Development and member of the Bipartisan Policy Committee Joseph J. Minarik asserted that Gift Aid was not the inspiration for the new plan; instead, the plan was to simply streamline the system into a more equal donor distribution. Mr. Minarik, who also worked to reduce tax-rates on the wealthiest tax payers in the Tax Reform Act of 1986, said that although fears of ruining the nonprofit sector abounded, giving rose by 10% the following year.
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