Posted on 30th April 2009
President Barack Obama’s first 100 days in office has presented a mixed assortment of positive steps and potential concerns for US donors that includes legislative changes to encourage donors and help innovative charities as well as proposals that may have a negative knock-on effect.
In a positive move, millions of volunteering opportunities will be available through the Edward M. Kennedy Act, which will also launch new social innovation fund pilots. AmeriCorps should triple in size to 250,000 members by 2017 through the Act, which will also create new volunteer programmes for young and older people and start funds to help non-profit organisations recruit and manage volunteers.
President Obama said, “This legislation will help tap the genius of our faith-based and community organizations, and will find the most innovative ideas for addressing our common challenges and helping those ideas grow.”
The new White House Office of Social Innovation is likely to be involved in administering the social innovation fund pilots. Sonal Shah, former head of global developments at Google.org, has now been confirmed as the new head of the office, according to reports from the Chronicle of Philanthropy.
Shah gave some details about the aims of the office during the Global Philanthropy Forum in April. The office will use new communications technology to find out what innovations are taking place, provide funds for innovation to non-profit projects and promote volunteerism. The White House has not yet released any formal plans for the office.
Potential concern lies with the proposals for a cap in tax deductions, which are also in a state of flux following President Obama’s 2010 Budget blueprint. The proposed cap on deductions for taxpayers in the highest tax brackets, earning over $250,000, is 28%. At present donors can claim a deduction up to the value of the tax they pay, up to 35%. The change would begin in 2011, after the US economy is predicted to come out of recession.
Independent Sector, a coalition of US charities and foundations expressed concern about the effect that the changes would have on charitable giving, and President Obama has not released more detailed proposals which were promised for April. However, officials at the White House have denied that the measures would cut donations to charity.
“The best way to boost charitable giving is to jumpstart the economy and raise incomes,” Peter Orszag, director of the US Office of Management and Budget, said in his blog. “Even to the extent that charitable contributions are affected by tax considerations, the budget contains other proposed changes (including retaining an estate tax), which will create stronger incentives for giving.”
The proposal to maintain estate tax at current levels, rather than allow exemptions to increase and the tax rate to go down, is popular with charities who say it will help them appeal to donors who want to give tax effectively.
A US house and senate conference committee has published a budget outline that proposes matching the President’s budget, permanently extending the 2009 exemption levels for estate tax duties to $7m for couples and $3.5m for individuals.
From the evidence in his first hundred days, it appears that President Obama is committed to supporting the development of the voluntary sector and active citizenship. While details of some proposed changes may be subject to debate, the commitment to social innovation is a positive sign.
