Are states finding ways to fill budget gaps at the expense of nonprofit donations?

Just this month, some states have been trying to fill budget gaps during very tense budget decision making – but do some of their methods come at the expense of nonprofits?  The National Council of Nonprofits and the Association of Fundraising Professionals seem to think so.

Caps on charitable deductions would give states an advantage come tax time.  But in New York and Hawaii, nonprofit coalitions are pushing hard to stop legislation that would place these limits.

In a report published by the Chronicle of Philanthropy, the legislation in New York would be a serious detriment to nonprofits and New Yorkers earning more than $10-million annually.  The legislation would limit their deductions to only 25% of their value, as opposed to the current 50%.  According to the New York State Division of the Budget, this would create $100-milliion for the state’s ailing budget.  The Association of Fundrasing Professionals published a whitepaper against such legislation.

Two similar bills were proposed by the legislature in Hawaii but were vetoed by Governor Lingle last Thursday.  Gov. Lingle, specifically cited the implications for nonprofits and economy as reasons for vetoing the bill. However, Hawaii's bill would have also limited people's ability to deduct for home mortgage interest, job-related expenses and certain tax payments, according to the Governor.