The Art of the Matter: Limits to Charitable Deductions Hurt Our Communities

With programming that serves constituencies from veterans to children with autism to seniors suffering from Alzheimer's, art museums provide rich and layered experiences offering different ways to interact with objects and the stories that lie buried within them.

Whether it’s reinforcing what children learn in schools, helping medical students develop their observational skills, giving seniors an outlet for their creative energies, contributing to the intellectual discourse—or, more simply put, making Seattle a better place to live, work, and visit—the Seattle Art Museum has a vital role to play.

But its ability to play this role is threatened by proposals in Washington, D.C.—from Democrats and Republicans alike—to reduce or even eliminate the income tax deduction for charitable giving. If charitable giving declines, the entire community suffers, as well as the millions of Americas who benefit from vital nonprofit programs and services.

Charities provide medical care, education, human services, disaster relief, and so much more. When there are cuts in government services, charities need to step up their efforts. Yet limiting the charitable deduction would constrict their ability to serve the millions of people who depend on them. The least harmful proposal currently under consideration could cost charities as much as $7 billion a year in contributions, while others would do even more damage. It's been estimated that giving would drop by more than 25 percent if the deduction were eliminated. As the nation emerges from a painful recession, this is not the time to discourage giving.

For nearly a hundred years, the federal tax code has offered a deduction to those who voluntarily share their wealth with the community. Charities leverage these donations in what the experts call a "multiplier effect." To quote the Charitable Giving Coalition, "for every $1 subject to the charitable deduction, communities see $3 in benefits. No other tax provision generates that kind of positive community impact."

Many more facts and statistics are provided by an infographic illustrating the ripple effects of the charitable sector at work in communities every day. It includes a poll commissioned by United Way Worldwide showing that Americans strongly favor the charitable deduction and believe that restricting it would drive giving lower, hurting charities and the people they serve.

A new report by The Philanthropic Collaborative reveals that charitable giving through foundation investments has a deeper and farther-reaching economic impact in America’s communities than previously understood. The first-of-its-kind analysis shows that foundation grantmaking supports millions of jobs, as well as billions of dollars in wages, GDP and tax revenues.

The arts sector contributes to that economic impact. To cite just two statistics, museums of all types provide 400,000 jobs and invest $21 billion annually in projects and programs. But it's about more than economics.

For example, of the 200-plus members of the Association of Art Museum Directors:

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1. 99 percent serve K-12 schools
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2. 93 percent serve colleges and universities
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3. 68 percent serve preschools
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4. AAMD members reach 40,000 schools across the nation
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These services are threatened by the potential loss of the charitable deduction. That's why we are working harder than ever to give lawmakers in Washington D.C. a clear understanding of the devastating realities facing our communities if limits or caps are placed on the charitable tax deduction. I urge you to write to your own lawmakers at www.house.gov and www.senate.gov.

Let's be clear. People don't give because of the tax advantage. It simply enables and encourages them to give more. It is also a remarkable affirmation of the government's faith that people’s individual choices, writ large, will make society better. And it's about more than the donor. It's about the millions of people who benefit from their generosity.

Seattle Art Museum photo via Wikimedia Commons