CalNonprofits Articles

JanTwo weeks ago CalNonprofits CEO Jan Masaoka testified about the impact on nonprofits of proposed changes to the charitable tax deduction in front of the U.S. House of Representatives Ways & Means Committee in Washington, D.C.

A good development: the Committee invited 43 nonprofit speakers to participate in the discussion. The missed opportunity: our community should have brought a more representative and compelling group of folks to the table. Of the 43, a startling 14 were United Ways. None were churches or congregations, and only four were from non-infrastructure organizations. All of the speakers were full time paid staff of nonprofits; our volunteer leaders were nowhere in sight.

As we all expected, the nonprofit folks mostly beat a single drum: charitable tax deductions benefit the poor. This over-simplification ignores two realities: that only itemizers can take advantage of the charitable deduction (which are wealthier overall than those who take the standard deduction), and that the majority of individual donations do not go to helping the disadvantaged (they go religious organizations and to universities). Even further, nearly all nonprofit speakers equated the nonprofit sector with human services to the poor, perpetuating a limiting stereotype of our nonprofit community. 

In other words, we looked too much like every other industry that defends the tax breaks that keep them employed.

Back on the positive side, we were pleased to hear California Congresswoman Linda Sanchez raise the issue of deduction benefits to non-itemizers. And many committee members expressed their support for maintaining the charitable deduction, although for different reasons.

Click here for a copy of the written testimony to the House Ways & Means Committee.

Read more for a copy of Jan’s oral testimony.

CalNonprofits’ Oral Testimony to House Ways and Means Committee

Mr. Chairman and Members of the committee: thank you very much for inviting the participation of nonprofits in this discussion.

I am Jan Masaoka, and I am CEO of the California Association of Nonprofits, a Chamber of Commerce-like organization representing California's nonprofits. Our vibrant nonprofit community includes more than 150,000 nonprofits employing more than 750,000 people, engaging 7 million volunteers and with purchasing power of $130 billion dollars each year.

To discuss the impact of the charitable deduction on nonprofits, we have to start with the impact of nonprofits on American life.

To illustrate:

  • I recently visited my aunt in an Alzheimer's care center run by our family church
  • My hearing aid uses technology developed in a nonprofit medical research lab
  • When my younger daughter was in a serious car crash, she was taken in a nonprofit ambulance to a nonprofit hospital where expert care made it possible for her to walk again, after all.
  • I enjoyed an evening with my nephew watching a nonprofit-produced documentary on the history of trains.

All of us breathe cleaner air today because of the work of nonprofit activists.

Many of us women and people of color were able to go to university and get jobs because of the work of nonprofit activists arguing against discrimination.

More of us are alive today because we weren't killed in an alcohol-related accident, thanks to the work of the nonprofit Mothers Against Drunk Driving.

And this morning I looked up something on the nonprofit encyclopedia, Wikipedia, without having to worry that my personal data would be sold.

All of these things are made possible in part of the nonprofit corporate tax exemption and the charitable deduction.

In fact, California's nonprofit sector is crucial to California's economy, as a center for technology innovation, and as an international leader in agriculture and the arts.

We have two messages to speak to today.

First, we support the charitable deduction because we know the power of nonprofits to strengthen families and communities. 

Second, we also support efforts to make our taxation system more fair.

We believe that the changes to the charitable deduction should be considered along with other changes, such as instituting a floor for the deduction and allowing non-itemizers to have tax benefits for their charitable donations.

In short: we support the charitable deduction. We support a fairer tax system. We look forward to more discussions where nonprofits can work with our elected representatives to discuss a broad variety of tax changes.


0 # Jan Masaoka 2013-02-27 21:21
Thank you Colleen! It means a lot to us that you've taken the time to write. Jan
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0 # Colleen Lukoff 2013-02-27 15:51
Jan, thank you for taking time to testify. I also agree that the sector often does not distinguish between the monies provided for low-income services vs faith groups and their own members and large educational institutions serving many of all income levels. Please continue to represent our work, and seek others to join in the broader discussion that is so vital.
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