Though they waited until the 11th hour, Congress was able to pass the American Taxpayer Relief Act of 2012 (H.R. 8), avoiding the “Fiscal Cliff” for the time being. Since its passage on New Year’s Eve, non-profits and their donors have been trying to sort out the impact of this bill on their bottom line.
Many non-profits and donors worried that the bill would include a cap on itemized deductions, thus reducing donations and leaving a gap in budgets that were set, perhaps, last Fall. While this did not happen, the down side of the bill is that the “Pease” limitation, which donors have had a break from since 2001, has been reinstated, causing families earning more than $300,000 per year to face reduced deductions on itemization, including charitable giving, and, basically, a higher tax rate.
The bill will also affect non-profits on their services side, as it has been suggested that the sequestration, which cuts of $85 billion in spending and is set to go into affect on March 1, 2013, will cut domestic programs and increase the need for services provided by many nonprofits, while at the same time, reducing the government’s funds to pay contracts with nonprofits. The sequestration was pushed back as part of the H.R. 8 deal.
During the recent recession, nonprofits were already hit hard with an increase in demand for services, forcing them to get creative with fundraising. With Congress continuing to talk about permanent tax reform throughout 2013, there is no doubt there will be even more changes to the impact on charitable giving.
As nonprofit leaders, it will be more important than ever to find new income streams and reach new donors. Geronimo Vacation Rentals for Charity offers a unique way to find new donors and increase giving from some established donors who may have hit a giving plateau. As we move into 2013 and begin to set budgets and strategic plans for 2014 and beyond, a creative campaign, such as vacation rentals, may be just what your nonprofit needs to get a bump in giving.