The federal government counts on many services essential to Americans to be provided by private charity. So, in addition to often funding private providers via grants and contracts, it offers federal taxpayers various incentives to donate their private funds to a wide variety of secular and faith-based service providers. One very big incentive is the federal deduction for charitable contributions. Federal taxpayers who give a significant amount of money away can reduce the amount of money they owe to the IRS.

Or, as revenue-hungry members of Congress and federal officials see the process: those taxpayers rob the Treasury of all that money, even if the result is increased donations to private charity. When federal finances are so out of balance, even many who strongly support the important role of private charities can be motivated to target tax incentives for charitable giving.

It is unlikely any significant changes to these incentives will be made during the short duration of this lame-duck Congress, and there is no strong indication that the next Congress will find the consensus needed to undertake a major reform of the tax system, including charitable tax incentives. But sentiment is building to limit the many “tax breaks” that are written into our federal tax law, and too often members of Congress lump together in that category very different things: (1) tax deductions that help people finance some luxury for themselves with (2) the charitable tax deduction, which taxpayers can only get by giving money away for the good of others!

To monitor the fate of charitable tax incentives, check the updates provided by the Alliance for Charitable Reform.

Faith-based organizations, which in general are more dependent than secular groups on charitable contributions by persons and families, should consider joining the Faith & Giving Coalition. Contact Rhett Butler (rbutler AT agrm.org), government relations liaison for the Association of Gospel Rescue Missions.