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Press release from the N.C. Center for Nonprofits, shared Dec. 5:

RALEIGH – The N.C. Center for Nonprofits and its more than 1,600 members across the state are calling on North Carolina’s congressional delegation to act quickly to prevent the arbitrary spending cuts that are part of the “fiscal cliff” and to protect the charitable giving incentive.

Unless Congress acts before Dec. 31, $54.6 billion will be cut from federal programs. For example, it would reduce support for Head Start programs in North Carolina by $13.4 million, meaning that 70,000 women, children and families would lose services as nearly $7 million is cut from child care, maternal care, and child development block grants that support the work of nonprofits. This would create a significant increase in the demand for nonprofits’ services and would reduce federal funding for many nonprofits.

During the negotiations to avoid the fiscal cliff, members of Congress from both parties have offered proposals to cap itemized deductions. This would have a consequential, adverse impact on the work of charitable nonprofits. A cap on itemized deductions would be exhausted by fixed-cost deductions, such as for mortgage interest and state and local taxes.

A cap would also effectively eliminate the tax incentive for most Americans to give to nonprofits. Dismantling the charitable giving incentive would devastate North Carolina’s nonprofit sector and those who are served by it in countless communities.

“After years of a struggling economy, North Carolina’s nonprofits simply do not have the capacity to continue to bear this additional burden,” said Jane Kendall, founder and president of the N.C. Center for Nonprofits.

These potential federal cuts would be imposed on top of four years of deep cuts to state grants and contracts for private nonprofits providing essential services. Many legislators are assuming that nonprofits will be able to step in to fill the gaps being created in important safety net programs through deficit reduction efforts.

During this recession, the workload of many of the state’s nonprofits has increased as 17.9 percent of North Carolinians now live in poverty.  In 2011, 93 percent of North Carolina nonprofits experienced an increased need for services, and 58 percent were unable to meet these needs.

The proposal to cap itemized deductions, at $17,000 or $25,000 for an individual, would have the most devastating impact on the work of charitable nonprofits.  Little or no room would be left under the cap for discretionary gifts to charitable nonprofits. Contributions to churches, synagogues and mosques would be included in the cap.

Capping the charitable deduction will harm a sector of the economy that currently employs more than 10% of the North Carolina workforce.  Sylvia Oberle, executive director of Habitat for Humanity of Forsyth County, said: “Donations are critical to our ability to build homes for persons living in substandard housing. We have nearly 3,000 volunteers – many of whom also donate to our cause – and it’s critical to preserve this important deduction to keep our work going.”

One of the many social values of the charitable giving incentive is that a healthy charitable sector lessens the burden on government. As charitable nonprofits fold under the added strain, costs to governments and taxpayers will rise and service delivery will suffer.

Tog Newman, chair of the Center’s statewide board of directors and board member and past chair of the N.C. Arts Council and South Arts, said he fears how these issues will affect nonprofits. “Nonprofits need to speak up and let their voices be heard. Staff, board members and volunteers of nonprofits know what will happen if these proposals go through. It’s important to contact your legislators now while negotiations are still underway.”

Angie Newsome

Angie Newsome is the executive director and editor of Carolina Public Press. Contact her at (828) 774-5290 or e-mail her at anewsome@carolinapublicpress.org.

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