The Impact of the Fiscal Cliff

Donations Of ItemsSome people may not remember it, but the country used to be in a real pickle about the fiscal cliff. Many politicians from both parties couldn’t agree on deal for the budget, and it threatened to throw the country into another shutdown. The negotiations ran into every aspect of American life, and nothing could get away from its influence – not even charity.

Charities and non-profits followed these talks closely because the result had serious implication to their strategies and operations. One of the most contested points of the talks was the discussion of caps.

Charity in Danger

Because of the nature of non-profits, they rely on the big-ticket donations that the top one percent sends their way because of the tax deductions they get. For example, if a rich individual in the twenty-eight percent bracket wanted to give a group a hundred thousand dollars, they can reduce their tax bills by twenty eight thousand dollars.

This situation also applies to donations of items. Cars, for example, are a high-ticket item. Instead of selling a used car, people can donate them to helpful organizations that promote great causes like Cars for MADD. Instead of getting cash up front, which will be considered as income and taxable, people can use their car to help reduce taxes by April.

No More Charity

If the talks result in the tax deductions going away, would anyone still donate to non-profits? Fortunately, many people see the folly in the caps policy, because even if it has a chance of hampering donations, it’s bad for the rest of the economy.

Charity encourages spending, and provides flexibility in the use of government funds. The lack of flexibility is one of the reasons that the government even had the fiscal cliff discussion in the first place. The last thing the world needs is fewer charity works. Hopefully, any discussion that affects it negatively should be stopped.