The uncertainty surrounding the fiscal cliff is causing some donors to proceed with caution.
As lawmakers work to negotiate budget fixes, they're weighing limits on tax incentives donors receive from charitable contributions. As fiscal cliff ambiguity abounds, many donors are ramping up donations they might not have made until 2013, Investor's Business Daily reports.
Scott Michalek, a Philadelphia-based financial adviser, says his clients have increased the amount of charitable donations by about 25 percent, the news outlet reports.
"There's been a noticeable increase in charitable giving," Michalek said. "Clients fear either (Congress or the White House) may eliminate the deductibility of charitable gifts or reduce the deduction."
One client is giving five times more than his typical $100,000 to take advantage of a tax climate he can be sure of, Steve Gariepy, head of a Cleveland-based law firm, told Crains.
Others are delaying gifts until more clarity comes about, Crains reports.
If there are no cuts to charitable deductions and the top tax bracket rises, which will likely be the case if Congress doesn't act, a wealthy donor's charitable deduction might be worth more next year, the Post-Gazette reports.
"For some, it's a wait-and-see situation," Robert Nelkin, president of a local United Way chapter, told the news outlet.
Nonprofits, worried about the financial toll of donation cap ambiguity, are doing anything but sitting down.
Many charities spent time earlier this month lobbying Congress in an effort to fight a potential cap on charitable deductions, which could save the government some $50 billion a year in tax breaks, according to the New York Times.
White House officials hosted two conference calls Friday with more than 250 nonprofit leaders on how to press Congress in supporting tax increases on the wealthy.
President Obama has warned that Republican tax proposals, which wouldn't raise rates, would threaten services for the needy, which benefit from donors who receive charitable deductions. Obama has stated repeatedly that averting the “fiscal cliff” won't be possible without increases in tax rates, Reuters reports.
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