Tax Incentives for Nonprofit Charitable Giving
What Is At Stake
Charitable Giving Incentives
Tax policy that supports charitable giving has been critically important to the development and sustained vitality of the nonprofit performing arts and has been since the tax deduction for charitable gifts was enacted in 1917. Incentives that encourage charitable giving to the nonprofit performing arts acknowledge the important role these organizations play in supporting vibrant and healthy communities.
On average, 40% of the annual revenue of the nonprofit performing arts sector comes from private contributions. Efforts to limit itemized deductions have been proposed by Congress and the administration. These include imposing a 28% cap on all deductions and implementing a floor where donors must give more than 2% of their adjusted gross income to take the charitable deduction. These actions would hamper giving and result in a significant decrease in contributions, thus reducing the services these organizations provide their communities.
IRA Charitable Rollover
The IRA Rollover allows donors age 70 1/2 and older to make tax-free charitable gifts directly from their Individual Retirement Account (IRA) funds to charitable organizations. Donors may give up to $100,000. Known as an “extender,” Congress has been extending this tax incentive on a year-by-year basis, resulting in uncertainty for both donors and charities.
Artists Fair Market Deduction
The artist fair market deduction bill, also known as the Artist Museum Partnership Act, would allow artists to take a fair-market value deduction for works donated to nonprofit institutions. Currently, artists (including writers, musicians, visual artists, and scholars) only receive a deduction based on the cost of materials even though posthumous donations of the very same work are eligible for a fair-market deduction.
What We Are Asking Right Now
We urge Congress to:
- Preserve incentives for charitable giving by preserving the chartable tax deduction as it currently stands.
- Reject any attempts to divide the charitable sector by favoring tax deductions for certain types of charities over others.
- Reinstate and make permanent the IRA Charitable Rollover.
Information provided by the Performing Arts Alliance.
APAP is a member of the Performing Arts Alliance.