Please Don't Squeeze the Charities: Taxing Charitable Contributions During an Economic Downturn

Grace S. Lee, University of Alabama School of Law

Abstract

Non-profit charitable organizations often experience enhanced financial strain during an economic crisis like the current one, since they frequently suffer not only a drop in donations but also an increase in demand for their services. This Article addresses this “squeeze” on the non-profit sector by proposing ways to increase levels of charitable giving by individuals and corporations during a recession, primarily through changes to the charitable deduction. In particular, this Article proposes converting the current deduction to a credit that is available to all taxpayers and providing a tax credit to employers who second their employees to work for charitable organizations. While neither of these proposals is flawless, implementation of one or both of these measures could alleviate the financial burden on charities during their times of greatest need.