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March 12, 2013

Why Tax Deductions for Charitable Contributions Help Older Adults

On Valentine’s Day, Larry Minnix, president and CEO of LeadingAge, was discussing with the U.S. House of Representatives Committee on Ways and Means a very unromantic topic: taxes. While the idea of taxes seems mundane, the specific topic at hand can get just about anyone’'s pulse quickening. You see, Minnix was discussing the importance of preserving the tax deduction for charitable donations as the committee reforms the federal tax code.

Donations are the cornerstone of how many organizations in the U.S. provide quality care and expand their reach, Minnix wrote in his blog post on LeadingAge. He promises: “We will continue to advocate vigorously on this topic.”

The Importance of the Not-for-Profit Sector

During his testimony, Minnix reminded us of Peter Drucker’s explanation that America has three distinct sectors that make the country successful: government to protect and defend, business to generate an economy, and not-for-profit organizations to change lives.

While charitable organizations are constantly changing the lives of the millions of people they serve right in our own communities, they are providing work for millions of Americans, too. According to Minnix, the sector employs 13.5 million people, which is third only to retail and manufacturing. “Add 4.5 million volunteers,” he says, “and America has a workforce of 18 million who draw either livelihood or life enrichment from the sector.”

The not-for-profit sector brings in $1.7 trillion in revenue, again according to Minnix’s testimony. The Charitable Giving Coalition states that, “For every $1 subject to the charitable deduction, communities reap up to $3 in benefits.” It goes on to say, “It’s unlikely government could find a more effective way to leverage private investment in vital community services.”

Bridging the Gap

Minnix states that while government reins in its spending, charities will be asked to fill gaps ordinary families cannot cover themselves. His testimony included several examples of how LeadingAge members use donations to provide innovative and essential programs and services. For example, continuing care retirement communities are considered not-for-profit organizations. “Their role in the continuum of services is that residents don’t ‘spend down’ to go on Medicaid because they are promised care for the rest of their lives,” Minnix says. “The CCRC model also plays a health-fostering and wellness role for seniors, helping them avoid disabilities and conditions that are difficult and expensive to treat.” CCRCs depend on charitable giving, especially to continue providing care for residents who outlive their means and for capital to maintain and upgrade facilities when necessary.

As Dr. Claire Gaudiani of Yale writes in her book, “America is not generous because it is successful, it is successful because it is generous.”

To watch Minnix’s testimony, click here. Do you want your voice to be heard? Let your legislators know how important fundraising is to your organizations of interest and the people they serve. Contact your legislators now.

Photo credit: StockMonkeys.com via photopin cc


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