In the turbulent times of tax restructuring nonprofits are the ones that could be hurt the most by some of the changes that are on the table. These new deals to extend the Bush era tax cuts or some variation of them stand the chance of having a significant financial impact on the donations that many nonprofits rely on to be able to do their good deeds.
Why does estate tax affect nonprofits?
Many nonprofits are funded through government grants and estate taxes are what contribute to those funds many times. With the proposed reductions in estate taxes to only 35% with higher exemption levels the funds, that are critical to many nonprofits success could be cut drastically. The result would be that the wealthiest of American’s would indirectly be taking away the support that is given to people of dire circumstances. A few of these groups are the unemployed, homeless, and single parents. Other groups that would find it more difficult to achieve their goal of helping others would be nonprofits that work towards new beginnings and medical advancements that will help everyone.
How does philanthropy play a role in estate taxes?
One of the first benefits to be threatened is the deductions and their benefits for philanthropists who wish to keep spreading good deeds after they have passed. Without nonprofit groups taking a stand for their passions they could risk losing the funds to continue their valuable work.
Every nonprofit who is concerned about their financial resources must take a stand. Make sure you contact your political representatives and let them know that the estate tax is a vital part of your potential and must remain at a reasonable rate. Don’t undercut your nonprofit’s potential because you didn’t fight against an unreasonably low estate tax.