Catholic Diocese of Spokane, Washington
Official News Magazine of the Diocese of Spokane
P.O. Box 48, Spokane WA 99210
(509) 358-7340; FAX: (509) 358-7302
Potential change in donations law means ‘the poor are definitely taking a hit again’
by Jami LeBrun, Inland Register staff
(From the May 19, 2005 edition of the Inland Register)
Each year, millions of Americans clean out their closets, garages and attics – bagging up their unused camping gear, polyester shirts and dusty kitchen utensils. Many of them, rather than have a yard sale, take these items – along with the old sofa in the family room and the patio furniture that no one ever sits on anymore – to their local charitable thrift store, where the goods will be cleaned, restored and resold to generate funds to help the needy. And many of these donors take a receipt from the store and claim these donations on their tax returns.
The Internal Revenue Service says that these donations represent $1.9 billion in tax fraud. When people donate household goods and take a receipt for their donations, they are left to fill in their donated items and estimate the value themselves. Unfortunately, the IRS says that many dishonest donors are overestimating the value of their old washing machines, posters and vintage clothing to the tune of nearly $2 billion. Lawmakers have proposed a bill that would cap the total amount of household donations at $500 each year – down from the current $5,000 cap.
But thrift stores worry that this significant cap will reduce donations from their biggest donors, and in turn reduce the operations and ability of their organizations to assist the poor members of American communities, including the poor in Spokane.
On Wed. May 2, representatives from thrift stores throughout Spokane held a non-profit summit at the headquarters of the St. Vincent de Paul Society to discuss plans that might make lawmakers more aware of the impact this law will have on charitable organizations.
“We believe there’s fraud,” said Mathew Meeuson, executive director of St. Vincent de Paul Society of Spokane, “but this law penalizes charities, not lying taxpayers.”
The group – which included representatives from St. Vincent de Paul, Salvation Army, the American Cancer Society, Volunteers of America, the Union Gospel Mission and Teen Outreach – made plans to organize a letter-writing and media campaign. They hope to generate the interest of lawmakers, their own clients and the general public and keep the bill from passing.
“All the non-profits are going to suffer if this passes,” said Marilee Roloff, president/CEO of Volunteers of America Spokane, as she listed charities that depend on donations of second hand items to keep their organizations running.
Meeuson said that charities are currently facing a variety of financial challenges that are limiting their services to the poor and needy of the Spokane community. Rising fuel prices, the recent increase in minimum wage, the coming increase in postal rates, and the increases in the Avista Corp’s energy rates are all taking their toll. “All this really hurts us,” said Meeuson.
The summit also discussed the impact on charities of the recent law that changed how donations of automobiles are handled. Before January, owners who donated their vehicles were able to write off the book value of their car. Now, they have to wait until the car sells and can only claim the amount that was actually paid for the vehicle.
The law has resulted in a severe drop in automobile donations to charitable organizations because non-profits do not put any money into advertising or overhead, so cars usually sell for much less than their book value.
Meeuson said that St. Vincent de Paul used to receive three to four donated automobiles a month. Since January, the organization has received only two cars. Similar impact has been felt by other charitable organizations. Representatives fear the new thrift store legislation will have a dampening effect on donations, similar to the drop in automobile donations.
Representatives at the summit worried that this new law will have the same effect on their organizations that depend on revenues generated in the thrift stores to fund their various programs that the change in automobile laws had on other organizations. That change “has just wiped things out for some groups,” said Lance Shew of Union Gospel Mission and Classy Rack.
Said Meeuson, “What it all comes down to is that our organizations are of great value to the community. The poor are definitely taking a hit again.”