Supporting Enlightened Tax Policy for Nonprofit Arts Organizations

Enlightened tax policy has been critically important to the development and sustained vitality of nonprofit arts and cultural organizations. Since 1913, when the tax code was initiated, the important public purposes of these organizations were recognized by granting them tax exempt status. In 1917, the tax deduction for charitable gifts was enacted, an acknowledgment of the important educational, literary and charitable role that the nonprofit sector plays in American society. Since that time, Congress has reaffirmed the importance of nonprofit arts and cultural organizations to receive tax-deductible charitable gifts.

The nonprofit community, including arts and cultural organizations, supports legislation which:

1. Upholds the principle of tax exemption for charitable arts and cultural organizations and the ability of these organizations to receive tax-deductible gifts from donors; and
2. Rejects proposals that only provide tax credits or deductions to a small segment of the charitable community.

Charitable deductions encourage people to help others, not themselves. Our elected officials can encourage more generosity by expanding tax-deduction benefits to an even wider group of American contributors.

The tax treatment of charitable contributions can have a very significant effect on both the amount and composition of personal gifts because people give more if they can deduct their contributions. Tax proposals that limit donations to organizations that primarily serve the poor divides the charitable community into false categories of “worthy” and “less worthy” groups, and discourages efforts by nonprofits to serve a mix of people within a community.