Charities Are Already Feeling Dropoff From Fiscal Cliff Uncertainty
NEW YORK ( TheStreet) -- Americans may not have a crystal clear understanding of the impending "fiscal cliff," in which taxes are set to rise and government spending set to fall come Jan. 1, but it's affecting their charitable giving anyway.
The tax issue comes with the "sun-setting" of the Bush-era tax cuts from 2001 and 2003. The spending cuts come from the debt ceiling negotiations last year between Democrats and Republicans in Washington, D.C.
There's an emerging school of thought that President Barack Obama will let the country go over the fiscal cliff, satisfied he's getting the tax hikes he wants out of the deal. Meanwhile, Republicans won't move on tax hikes for the wealthy, unless the president and Democrats in Congress agree to substantial spending cuts, and that's likely off the table; few Democrats will vote to cut Social Security and Medicare.
While Congress and the president hash all that out, what does the fiscal cliff mean to millions of Americans who want to give to charity and earn some decent tax breaks in the process?
U.S. charitable trends seem to be in decline as 2012 draws to a close.
According to a study by Campbell Rinker/Dunham & Co. , about 15% of Americans say they will give less to charity this year, while only 6% will give more.
Americans cite growing health care costs (36%) and their "personal financial situation (35%) as the major reasons they will be cutting back on charitable giving, the study notes. But 32% say the fiscal cliff is a "major" reason they won't give more to charity this year.
"The ongoing concerns over the economy and its impact on the personal financial situation that many donors face is clearly continuing to take a toll on charitable giving," says Rick Dunham, president and chief executive of the company. STORY_PAGE_BREAK/>
"This is a real concern as many, if not most, charities rely on the final month of the year for the largest portion of their financial support," he says. "And with annual charitable giving here in the U.S. still $12 billion below 2007 levels, and no real recovery so far this year, this is not an encouraging sign for nonprofits as they head into these final and vital weeks of fundraising for 2012."
Part of the reason so many Americans are backing off from charitable giving is a fear that Washington pols will cap charitable tax deductions in a fiscal cliff deal -- a hot topic in the recent presidential campaign. Dunham & Co. says a tax cap on deductions would be devastating for charitable institutions, as 33% of Americans would cut their philanthropic donations, the firm predicts.
With so much uncertainty in the air, what can Americans expect on the charitable giving front this year and next? Edwards Wildman , a Boston-based financial and tax advisory firm, breaks it down for you in a Thursday white paper .