(WASHINGTON, September 27, 2011)—Independent Sector is very pleased with the efforts of the Administration to ensure that the American Jobs Act extends hiring incentives, most notably the payroll tax holiday to nonprofit organizations. The nonprofit and philanthropic community currently employs 10 percent of the U.S. workforce. Strengthening this workforce is a win-win opportunity to  expand employment through nonprofit programs that are dedicated to improving life for others.

We also note, with concern, that the President’s proposal in many instances does not treat nonprofit employers equitably. The tax incentives made available to nonprofits to hire veterans and unemployed individuals are only two-thirds of the amount available to for-profit employers.

A White House fact sheet attempts to justify the difference by saying “the tax-credit amount for non-profits is adjusted to reflect the fact that there are no taxes paid on profits and no deductions for wages paid to employees generating the tax credits.”

This argument is flawed. The reason nonprofits pay no taxes on profits is because we do not generate profits for distribution to owners and investors.  Nonprofit organizations whose revenues exceed expenses simply use those funds to help even more people.

Further, the fact that for-profit employers are able to deduct wages from their gross revenue actually means the cost of employees is already being subsidized in a way that is not available to nonprofits.  

We will work with Congress and the Administration to make the full value of these tax credits available to nonprofit organizations. With more new workers, nonprofits will be able to do more good for more people in more communities.

Independent Sector also strongly urges Congress and the President to pay for this jobs package without capping the charitable deduction.

It has been estimated that the Administration’s proposed 28 percent cap could cost charities as much as $7 billion a year in contributions. Without this income, nonprofit organizations will struggle to meet the growing demand for services caused by the sluggish economy and decreased government funding. Moreover, they will find it hard to fund new jobs. The proposed cap on the charitable deduction is fundamentally at odds with the purpose of the Jobs Act.

The nonprofit and philanthropic community will continue to press the White House and Congress to protect tax incentives for charitable giving in order to allow nonprofit organizations to create jobs and provide much needed services to communities around the country. 

Learn more about the American Jobs Act.

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Independent Sector is a nonprofit, nonpartisan coalition of 600 charities, foundations, and corporate philanthropy programs, collectively representing tens of thousands of charitable groups in every state across the nation. Its mission is to advance the common good by leading, strengthening, and mobilizing the nonprofit and philanthropic community. Learn more at IndependentSector.org.