The end of the year is when most people donate to charity. Chalk it up to the holiday spirit — or the looming deadline to cash in on tax benefits.
But how are this year’s fiscal cliff negotiations influencing charity crunch time?
“Right now the end of the year is looking pretty good for most of them,” said Carol Thomson, president of SteegeThomson Communications, a consulting firm that helps nonprofits with fundraising and marketing efforts.
“Driving some good donations are concerns about increases in the tax rates next year, which has led some donors to speed up their giving or increase it,” Thomson said. “So that’s been a nice little windfall for some of our clients.”
Fiscal cliff negotiations mean tax deductions for charitable donations may be in jeopardy. Added to that is uncertainty over tax rates for upper income families.
It suggests that giving now might be more attractive than giving next year.
One Philadelphia-based financial adviser told Investor’s Business Daily that his clients have upped their charitable giving by about 25 percent in response to fiscal cliff uncertainty.
Ann O’Brien Schmieg is a senior vice president at the United Way of Greater Philadelphia and Southern New Jersey. She agrees that tax policy uncertainty may be fueling donations in the short term. But if charitable deductions end up falling off the fiscal cliff, it would really hurt.
“We’re more concerned for the charitable sector in the region, in particular the health and human service organizations that United Way serves and funds,” said O’Brien Schmieg. “I’m very concerned about their inability to take advantage of that deduction.”
The picture in Washington is expected to clear up — maybe — before Jan. 1. Data on the strength of 2012 year-end giving should become available in the coming weeks.