Proposed Tax Changes, Funding Cuts and Uncertainty Over 'Obamacare' Could Devastate Charitable Health Care Donations, National Survey Reveals

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Association for Healthcare Philanthropy

Mar 15, 2011, 11:38 ET

WASHINGTON, March 15, 2011 /PRNewswire-USNewswire/ -- Cuts in charitable tax deductions proposed by both the Bowles-Simpson Deficit Reduction Commission and President Obama's 2012 budget, and uncertainty over implementation of so-called "Obamacare" could severely limit the ability of nonprofit health care institutions to raise donations to support free services for the poor and pay for new equipment and facilities, warns a new national survey by the Association for Healthcare Philanthropy (AHP).

The President's budget seeks to cap charitable deductions at 28 percent, while the Bowles-Simpson proposal would reduce the tax incentive for charitable giving to a 12 percent tax credit for donations that exceed two percent of a taxpayer's adjusted gross income.

"Combined with growing state and federal cuts in funding for social services and uncertainty over implementation of the Patient Protection Act, these draconian tax proposals—if enacted—add up to a triple threat to America's not-for-profit health care providers," said William C. McGinly, Ph.D., CAE, AHP's president and CEO. "This is not the path to take as we recover from the recession."

AHP's members direct charitable fundraising on behalf of more than 2,000 nonprofit hospitals and health care organizations in the United States and Canada.

The association surveyed U.S. members in February 2011, and nine out of 10 respondents agreed that the proposed Bowles-Simpson tax changes will cause significant reductions in overall giving to their organization, with 64 percent strongly concurring that the adverse impact on major gift-giving would be considerable. About 40 percent estimate that giving would decrease between 10 and 30 percent if significant changes are made to the current tax incentives for charitable donations—which conservatively could amount to more than a $1.07 billion drop in total annual giving to nonprofit hospitals based on AHP's FY2009 giving statistics.

"More than 60 percent of fundraisers believe that tax code changes will reduce donations, and most predict that reduced funding will impede buying much-needed hospital equipment and paying for hospital improvements and expansions, during a time when our communities' health care needs are increasing and the demands on nonprofit hospitals continue to grow," noted Mary Anne Chern, FAHP, ACFRE, president of White Memorial Medical Center Charitable Foundation in Los Angeles and AHP's board chair.

"These concerns are being expressed by fundraisers who work on behalf of a wide range of health care institutions, including local community hospitals, medical centers, medical schools, children's hospitals, nursing homes and assisted living facilities," Ms. Chern said. "The impact of any changes that reduce tax incentives for giving could be devastating for health care in the U.S."

Most significant are respondents' views of what could be the negative domino effect on charitable fundraising as the result of tax code changes, the lingering impacts of the recession and concerns over the implementation of the Patient Protection Act. As one respondent wrote, "We have already experienced decreased giving from the effects of the economy and uncertainty over health care reform. This (tax code changes) would be another disincentive for people to give."

McGinly pointed out that while most donors do not make gifts because of tax deductibility, that adverse tax consequences affect the amount of a donor's gift. "This is especially true of major gifts and planned giving, where donors consider the impact on their tax liability," he said. "These tax code changes would compound the current fiscal problems that most nonprofit hospitals face, particularly for health care providers serving in-need communities, where in some cases nearly 50 percent of the patients rely on charity care or some form of assistance beyond what federal and state programs provide."

The Association for Healthcare Philanthropy, established in 1967, is a not-for-profit organization whose more than 4,700 members direct philanthropic programs in 2,000 of North America's not-for-profit health care providers. AHP's members include fundraising professionals, development staff, public relations professionals, trustees, marketing professionals, administrators and executives interested in health care fundraising.

www.ahp.org

SOURCE Association for Healthcare Philanthropy