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Aviv: Restoring Lapsed Tax Extenders Is Vital to Nonprofits

It’s no secret that Washington’s legislative gridlock continues to impede progress on restoring America’s economic health. Even more distressing is how many time-proven tools that safeguard our social safety net have also fallen victim to this standstill.

Congress might have, without great effort, eased the burden for many by renewing a broad package of individual and corporate tax credits and deductions that were instead allowed to expire at the end of 2011.

Lost in the debate over these “tax extenders” are the millions of families who benefit every day from the programs and services provided by charitable organizations in every community across the country. The tax extenders package contains a number of vital charitable giving incentives that support the work of America’s nonprofits to serve our most vulnerable communities.

These include provisions that encourage donations of food to help those in need, computers to help unemployed people look for work and books to help disadvantaged kids do their homework. Others encourage the rollover of individual retirement account funds to charities and the donation of land easements to preserve open spaces for generations to come.

The scores of tax extenders that expired last year have left nonprofit organizations across the country without many of the donations they need for nearly three months. Many food banks, for instance, had benefited from incentives that allowed small and mid-sized businesses to take an enhanced tax deduction when they donate food. But without that incentive in place, donations from restaurants, farms and small retailers are simply not coming in because it’s often cheaper for them to dump the extra food in a landfill than to donate it.

Expiration of tax extenders has been a recurring problem in recent years. And while lawmakers have in the past found a way to retroactively enact expired extenders, this is sometimes a hollow benefit for the nonprofit community — mandatory IRA withdrawals cannot be retroactively “rolled over” to charity. Neither can spoiled food.

Even more troubling is the suggestion by some on Capitol Hill that consideration of tax extenders should take place only as part of a broader tax reform initiative contemplated for early 2013. Nonprofit leaders also fear that lawmakers will debate at length over the merits of this or that special provision — with the survivors being those extenders whose backers have the best political connections.

A sensible fix that Congress could provide right away is a one-year extension of all the expired provisions, with the effectiveness of individual extenders to be sorted out later, one by one, as part of overall tax reform.

Each tax extender represents an activity that Congress has encouraged in the past because it was known to create jobs, improve lives or strengthen society. But allowing the lapse of provisions that encourage charitable giving has caused the curtailment, or even the end, of vital programs that serve millions of individuals and families in communities all across our country.

With the economy still fragile and Americans everywhere struggling, promptly restoring the tax extenders that expired at the end of 2011 is essential. It’s time for lawmakers to set aside their differences and help those who need it most.

Diana Aviv is president and CEO of Independent Sector.

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