Last week $85 billion in across-the-board federal spending cuts were triggered as a result of sequestration, which will affect nearly every agency throughout the government. For most agencies that support museums, including IMLS, NEA, NEH and NSF this means a five percent cut in their annual funding, including a reduction in grant-making activities for the year ahead.
While Congress may still undo or restructure sequestration, federal agencies are now determining how to absorb these severe cuts. The National Endowment for the Humanities expects to make fewer new awards at lower award amounts. The National Science Foundation is expecting to award 1,000 fewer new research grants.
Congress’s inability to reach agreement on spending issues has complicated and slowed the federal budget process this year, interest is also picking up on comprehensive tax reform. The House committee with jurisdiction over the tax code held a hearing on February 14 on proposals to reform charitable contribution tax incentives, many of which could have a devastating impact on giving to museums and other nonprofits.
Do your legislators know how important charitable giving is to your museum? Tell them right now. Here is a sample letter to guide you:
I strongly urge you to oppose any measure to limit the destructibility of charitable donations. While I take seriously the need to reduce the federal deficit, I am deeply concerned about the impact of limiting tax incentives that encourage charitable donations.
Charitable donations account for more than one-third of museums' operating budgets, and given the economic uncertainty, many museums have been forced to cut back on staff, programs, hours or even close down entirely. Many of those that remain open face a very uncertain future, even while the demand for their programs and services is higher than ever.
Especially at a time of reduced funding at all levels of government, Congress should do all it can to seek incentives on private giving. While Americans do not make charitable gifts solely for tax reasons, tax incentives certainly lead to increased and more generous gifts. The charitable deduction is truly different from other deductions because it encourages taxpayers to use their income to benefit their communities, rather than themselves.
I urge you to oppose proposals to limit the destructibility of charitable gifts, which would be devastating to museums and other nonprofits serving our community. Please don't hesitate to contact me if I can provide any further information.