Barack Obama

The Jobs Act and Donations

How will Obama's American Jobs Act affect donations? We talk to local arts groups about it.

published Friday, September 16, 2011

President Obama told the joint session of Congress that everything in his proposed $447 billion American Jobs Act "will be paid for. Everything."

A main source of funding for the bill would be to limit the income tax deductions for people who make over $200,000 a year, including the deductions people and/or couples can take for making gifts to nonprofit organizations and charities.

There is no indication that there would be any changes to corporate gifts or sponsorships, nor would there be any changes to deductions for married couples with an adjusted gross income less than $250,000 ($200,000 for individuals).

A basic breakdown on the jobs bill has now been released by the White House. The section in question reads, "…limit the value of all itemized deductions and certain other tax expenditures for high-income taxpayers by limiting the tax value of otherwise allowable deductions and exclusions to 28 percent." Right now, people in the top 35 percent tax bracket can write off 35 cents on every dollar they donate or spend on housing, medical expenses, etc.

According to the Chronicle of Philanthropy's analysis, "President Obama's plan means that a donation of $100,000 would save a donor $28,000 in taxes; $7,000 less than he or she would save today."

If this part of the bill passes and becomes a reality, the question will become, how much of an incentive is the tax write-off when it comes to making a donation?

Cory Norman, Assistant Producer at Dallas' Theatre Three says he and founder Jac Alder agree that the cap on deductions would not have much of an impact on them. "I don't think our donors are motivated to donate by a tax deduction. Instead, I think they donate to Theatre Three because they believe in and support the work we do," says Norman.

Shakespeare Dallas' Development Manager Jenni Stewart agrees. "Our patrons and donors are very passionate about our mission, quality of programming, and accessibility. They give to ensure our programs continue year after year and to make sure that we are able to maintain a low cost ticket price and donation-only performances of Shakespeare in the Park. Tax deductibility, for our patrons, is more an added bonus than an incentive to give," says Stewart.

Jody Ulich, President  of the Arts Council of Fort Worth and Tarrant County, agrees that arts patrons are motivated by passion more than deductions, but she also says that the bottom line is a factor that cannot be ignored.

"We track when donations are made, and the majority come in during the last two to three months of the year," says Ulich. She says this indicates that some individual givers do wait until they get an overall picture of their financial situation before making a donation, and that that donation will be written off.

Ulich says that while the impact may not be a huge one, it would be felt. While she does not believe huge numbers of people will stop support the arts with donations, she does think it is very likely that the individual amounts may go down. "Instead of making a thousand dollar donation, they may make a $200 donation."

The American Jobs Act is still new, and like all pieces of legislation, it is a moving target. At this point it is impossible to know what, if any, parts of it will pass. President Obama has said that he would be willing to sign portions of the bill, and then push Congress for the rest later. Thanks For Reading


George Leon writes:
Friday, September 16 at 12:26PM

As a patron of the arts, I budget my charitable contributions the same way I budget any other expenditures and calculate the tax deduction into my overall budget. So in the same way that I could afford a smaller mortgage if the mortgage interest deduction was reduced, so too I could afford smaller contributions if the deduction was lessened. I don't support the arts just to get the deduction any more than I bought a home to get a deduction: I am committed to both but could afford less of each with smaller deductions. And since I can't change my mortgage payment, unfortunately my contributions would need to take the entire hit.

Joseph writes:
Friday, September 16 at 12:29PM

Probably, President Obama is not making much donations. Traditionally, church organizations are the ones which rely on donations, other than arts/theaters. As Warren Buffet recommended, why not tax on wealth (those involved with stocks, funds and asset-backed securities) than the very core of American ethics? Many of us often go through jobless times, for me one and a half years, which put me into near bankrupcy state. My credit card company conveniently raised interest rate from 7.5 percent preferred rate to 20 percent to accelerate the bankruptcy. Why not federal employees, including Mr. Obana, forgo one month of salary to balance the budget? How does he feel the pains average Americans go through? In many foreign countries, leaders are more than willing to do that. In Korea, President Lee, former executive of Hyundai, donated his whole estate but a single house (modest by any means) so that he would have a place to go after he resigns.

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The Jobs Act and Donations
How will Obama's American Jobs Act affect donations? We talk to local arts groups about it.
by Emily Trube

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