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'Fiscal Cliff' Deal a Victory for Nonprofits That Care About Poor and Vulnerable Communities

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The plan passed by Congress over the New Year's holiday to avoid going over the "fiscal cliff" is a resounding victory for nonprofits that serve or represent those with the least wealth, opportunity and power. I applaud President Obama and Vice-President Biden for negotiating a good deal for underserved and low-income communities. Is the deal perfect or is it everything I had hoped for? No, it's not. But it's clearly a positive first round to what will be an ongoing partisan battle over the next four years as the administration attempts to move our nation toward economic prosperity and greater equity.

Before I get into why I'm pleased with the deal, let me explain why the organization I lead is so involved in this issue. The mission statement our organization adopted in 2007 provides helpful insight:

We envision a fair, just and democratic society in which the common good is recognized as a high priority; where a robust public sector is empowered to protect, preserve and extend the commonly held resources and the public interest; where a vital nonprofit sector provides voice and value to those most in need; and where all people enjoy equality of opportunity, access and fair treatment without discrimination based on race, gender, sexual orientation, physical ability, economic status, national origin or other identities.

We envision philanthropy at its best contributing to this vision of society by operating with the highest standards of integrity and openness, and by investing in people and communities with the least wealth and opportunity and nonprofit organizations that serve and represent them.

NCRP believes a robust public sector is essential to creating a more just and equitable world. Philanthropic dollars are a fraction of the funds needed to create the fair and democratic society we envision. It would be unrealistic and unfair to grantmakers to expect that institutional philanthropy could do this alone. We support policies that foster a robust public sector and also ensure nonprofits can continue to play their vital role. Our sector is an integral complement to government, not a substitute for it, but because we are in relationship with it, we must lend our voice to issues that affect our work and the communities we and our members serve.

So what's so good about the fiscal cliff deal?

The most important element of the deal is that it raises an estimated $620 billion in revenue according to the Joint Committee on Taxation, almost exclusively from those who can most afford to pay:

  • Tax rates increase to 39.6 percent on incomes above 400,000 for individual filers and over 450,000 for married filers, restoring the rates to the 1990s level.
  • Capital gains tax rates increase to 20 percent for single filers making 400,000 and couples making 450,000, the same levels we saw under President Clinton.
  • Estate tax rates increase to 40 percent for the wealthiest estates.

Another element of the deal I'm pleased with is the extension of unemployment benefits. At a time when so many Americans are still out of work, this deal extends unemployment benefits for more than two million people who would have lost those benefits immediately without Congressional action. We need a strong social safety net, and this will contribute to that.

Some nonprofit leaders are likely concerned over the reinstatement of the Pease limitation on itemized deductions. They anticipate that this limitation will reduce charitable giving by the wealthiest households. However, there is little evidence that this provision will have a significant effect on how much donors give to charity.

What we need to ensure robust charitable giving now and in the future is an economy that continues to improve. When the economy is healthy, and when government has the revenue it needs to play its proper role, nonprofits and government can complement each other in pursuit of a fair, just and democratic society.

In the coming weeks, the conversation will turn to spending cuts, which will likely be voted on in February. It is essential that nonprofits raise their voices to ensure programs and services that benefit the poor, elderly and other vulnerable populations are protected.

Aaron Dorfman is executive director of the National Committee for Responsive Philanthropy (NCRP). He frequently blogs about the role of philanthropy in society.