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 Leadership Briefing 
The Jewish Federations of North America - The Strength of a People. The Power of Community.
JFNA Will Work to Protect Most Vulnerable Amid Fiscal Cliff Compromise
January 2, 2013

The Jewish Federations of North America (JFNA) welcomes the compromise that Congress and President Obama have reached to avoid the fiscal cliff, which maintains the charitable contribution tax deduction at its current level and delays spending cuts that would disproportionately affected the nation's most vulnerable.

As the fiscal debate moves forward, JFNA continues to urge Congress and the Administration to protect the charitable tax deduction that is so vital to the work of the nation’s leading charities and to ensure that any spending decisions don’t devastate the nation’s safety net.

"The deal struck by Congress and the Administration rightfully does not hinder charitable contributions and, for now, defers cuts to the programs that make up our vital social safety net," said Michael Siegal, Chair of the Board of Trustees of JFNA. "However, we know the fiscal debate isn’t over and, as this fight continues, Federations will continue to work with coalition partners to ensure utmost protections for those at risk."

While there is still more work to be done in the coming months, overall, the agreement reached by Congress is a positive move that not only delays scheduled cuts but also extends unemployment insurance benefits for the millions that rely on these programs. In addition, the agreement retroactively reinstates the IRA Charitable Rollover and extends the provision through the end of 2013. Thus, rollovers during calendar year 2012 of up to $100,000 directly from an IRA trustee to a charity will be treated as a qualified charitable distribution. There are also provisions that permit “catch up” or “re-characterization” IRA charitable rollovers that will qualify for 2012 if completed by the end of January, 2013.

The bill does reinstate the so-called "Pease limitation" that imposes a "haircut" of 3 percent of income in excess of a threshold of $300,000 on certain itemized deductions including the charitable contribution deduction. This provision was first introduced into the tax law in 1990. JFNA and other national charities would have preferred that charitable contributions had been carved out of any reinstatement of Pease, as that would have further emphasized that charitable deductions are uniquely special and have greater societal benefit than the other deductions in Pease. JFNA will continue to stress this point during the upcoming tax reform debate.

"Deficit reduction must be achieved without compromising the long-standing and productive partnership between social service charities and government," said William Daroff, Vice President for Public Policy of JFNA. "We are pleased to see that the leaders of this country, Democrats and Republicans alike, have come together and reached an agreement that maintains  policies and social program funding that protects millions of Americans in need."

JFNA has been working for the past several years to ensure that the Jewish community and those most vulnerable are not detrimentally impacted by potential budget cuts or tax reforms. Though this most recent fiscal debate has reached a short-term compromise, JFNA continues to work with nonprofit and charitable partners to advocate on behalf of the needs and concerns of the Jewish community.

Daroff added: "Spending cuts should not unfairly target the most vulnerable among us, whose lifelines are dependent on critical assistance programs, and tax policy should encourage charitable giving, especially during times of economic distress. As demands on nonprofits continue to grow, we must ensure that the tax code continues to promote giving and enables charities to meet the rising demand for critical community-based services."

The ability of donors to deduct contributions to charity from their taxes is a cornerstone of America's charitable tradition, and an indispensable source of funding for social service agencies that provide vital alternatives to direct government programs. In addition to providing for those in need, nonprofits create jobs and leverage economic activity. Nonprofits account for 5 percent of GDP, 9 percent of the economy's wages and nearly 10 percent of the nation's jobs. Barriers that limit charitable giving only hinder this critical nonprofit sector.

As the 113th Congress commences in the New Year, JFNA will continue to work with its coalition allies to ensure that government policy continues to protect those most vulnerable and incentivizes charitable donations.

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