Fiscal Cliff Deal Impacts Local Giving


Earlier this year, we waited as news outlets kept us up to minute on whether we would go over the proverbial fiscal cliff. Now that part of the deal is done, have you been asking yourself "how does this directly affect me and my community?" Legacy Foundation, your community foundation, understands that sometimes national news doesn't feel like it has an impact at home. Here are some ways the fiscal deal impacts nonprofit services at home.

Hunger in Lake County: Did you know that in our county more than 88,000 people are food insecure? The Lake County community constantly reports to Legacy Foundation that access to food is a main concern for our families, especially children. The Food Bank of Northwest Indiana currently has resources to provide approximately 5 million pounds of food per year, yet the local need is 25 million pounds and 52.4% of the Food Bank's clients receive SNAP benefits (formerly known as Food Stamps).

  • Child Hunger: In Lake County, child hunger ranges between 25% and 33% and in 2011 over 47,000 students received free and reduced lunch.
  • Senior Hunger: As the number of older adults increases, the demand for social services, especially the need for adequate nutrition services is likely to increase. Of the seniors served by the Food Bank of Northwest Indiana 43% lack access to food at times.
  • The fiscal cliff deal addressed the following food issues:
    • Access: The Emergency Food Assistance Program (TEFAP) remains unchanged; Supplemental Nutrition Assistance Program (SNAP) benefits were not cut, but $110 million was cut from SNAP Nutrition Education; possible cuts to programs that provide nutrition assistance have been delayed for two months. With federal spending cuts impending, the government support that allows families to continue receiving services is still at risk.
    • Donations: The food donation tax deduction was reinstated and renewed for 2012 and 2013. This incentive makes it a great time to make a donation to your local food bank, pantry, or soup kitchen.
Community Services and Programs: Over the last three years nonprofits have seen a severe increase in need for services with some agencies reporting the number of clients has increased by thirty and fifty percent. This need has placed a strain on their already scarce resources.
  • Unemployment in Lake County: As unemployment rises, nonprofits see more requests for basic needs, for health care, for mental health care and other services. In November 2012, the unemployment rate in Lake County was 9.4%.
  • The fiscal cliff deal addressed the following unemployment issue: Benefits for the long-term unemployed have been extended through the end of 2013. Without unemployment benefits, many nonprofits would simply have to cut back on services because the numbers of individuals and families in need would greatly exceed their available resources.
  • Donations: Giving back to our nonprofits remains as important as ever as thousands of our Lake County neighbors are unemployed, triggering an increased need for services including shelter, food, and clothing.

The fiscal cliff deal addressed the following issues for charitable donations:

  • Charitable Deductions: There is no cap, but there is a federal estate tax; therefore whether you want to make a charitable gift today or plan a gift for tomorrow, now is a great time to give or to create your charitable giving plan. Legacy Foundation has staff and advisors that understand the current tax regulations and charitable planning and can discuss planning options with you.
  • The Pease Limitation: For incomes above $250,000 single/$300,000 married when taking itemized deductions (The Pease limitation reduces itemized deductions by 3% of the amount by which adjusted gross income exceeds a specified threshold, up to a maximum reduction of 80% of itemized deductions. Could have an impact on very large strategic gifts).
  • IRA charitable rollover: If you are an individual 70 ½ or older, you can distribute up to $100,000 directly from your traditional IRA to a charitable organization, without having to recognize the amount as income.

The IRA charitable rollover, as well as enhanced deductions for the donation of food and land for conservation purposes have been reinstated and extended through the end of 2013. This makes now a better time than ever to make a contribution to a cause you value.