“Quid Pro Quo” Implications of Proposed Limit on Tax Deductible Gifts

In nonprofit fundraising you often hear the words “quid pro quo” especially in reference to the making of a gift. On a most basic level, anytime an individual donates to charity they are in fact getting “something for something” – they are getting a tax deduction for making a gift to a 501(c)(3) or other tax-exempt organization. Taken to its extreme, however, quid pro quo can take on the connotation of “you scratch my back and I’ll scratch yours” -- and when a fundraising situation moves into this grey area, the ethical aspects of the relationship come into play.

A March 3rd report issued by the Center on Budget and Policy Priorities states that “President Obama’s proposal to limit the tax deduction for charitable contributions would affect only the top 1.2 percent of affluent U.S. households and, despite claims to the contrary, would reduce total charitable contributions by only 1.3 percent.”

Thankfully, most donors look for the intangible benefit of “making a difference”, but the tax deduction is always a helpful incentive. Charities across the nation are constantly looking for ways to attract donors to support the various worthy causes we represent. Sometimes we offer incentives in addition to the implicit tax benefit – prime seats at events, naming opportunities, etc.

The question I have for readers, is, if the proposed limit on the tax deduction for charitable gifts becomes law, do you think it will force charities to come up with new or additional “quid pro quo” incentives to encourage or maintain gifts from affluent donors?