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Higher Education Groups Urge Caution on Charitable Giving Deduction

November 26, 2012


​ACE and a coalition of higher education associations have sent letters to President Obama and Congress, urging caution when considering changes to the charitable giving tax deduction as part of negotiations to end the so-called fiscal cliff.

According to the Council for Aid to Education, colleges and universities received $30.3 billion in charitable gifts in 2011. As the associations point out, private charitable donations work in concert with federal and state investments to ensure access to higher education through student aid.

They also support teaching, groundbreaking research and technological innovation, and the public service activities of colleges and universities.

“We understand that reforming the tax code in the coming months will be a critical element of addressing our nation’s fiscal woes,” the groups wrote. “While we continue to be concerned about a number of expired or expiring tax provisions that enhance access to higher education, we urge you to proceed cautiously when considering changes to the current charitable deduction, which helps generate needed private support for thousands of organizations and institutions, including colleges and universities and the students they serve.”

The associations also point out that the benefit to society of a donation far exceeds the financial benefit received by a donor. For every dollar typical donors receive in tax relief for their gift, the public gains approximately three dollars of benefit.

Talks continue on the looming automatic spending cuts across the federal government that will take effect Jan. 2 if lawmakers cannot devise a plan by the end of the year to reduce the deficit.

This highly problematic situation, known as sequestration, would be dramatically exacerbated by the expiration of the Bush-era tax cuts, including the American Opportunity Tax Credit, the expanded student loan interest deduction, expanded Coverdell Education Savings Accounts and employer-provided educational assistance (Sec. 127) benefits.

Together, the combination of budget cuts and tax increases is popularly known as the fiscal cliff.

ACE Senior Vice President Terry Hartle presented a webinar Nov. 15 on what the 2012 elections mean for higher education, which included a detailed discussion of the fiscal cliff and its potential effects on education funding. An archive of his presentation is available here.

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