The following editorial by Senate Republican Leader Tom Kean on his effort to help New Jersey’s non-profits while reducing the burden on state taxpayers was published in the Star-Ledger on April 24, 2016:
New Jersey’s nonprofit charitable organizations improve people’s lives every day, and offer much-needed support in times of crisis.
While our nonprofit groups have repeatedly risen to the task, including after 9/11 and Hurricane Sandy, they are facing new financial pressures that put at risk their future ability to respond.
A concerning new report by New Jersey’s Center for Non-Profits has shed light on just how difficult it has become for the state’s charities to meet growing needs.
— Senator Tom Kean (@tomkean) April 24, 2016
— NJ.com (@njdotcom) April 24, 2016
The center’s annual survey found that 74 percent of New Jersey nonprofit agencies experienced an increased demand for services and 65 percent realized higher expenses in 2015, while only 42 percent received more funding. Perhaps most troubling, 35 percent reported that expenses exceeded support and revenue.
If such trends continue, it will be impossible for many of our charitable organizations to expand or even to maintain the services they currently offer to their communities.
At the same time, New Jersey taxpayers are stressed from bearing the third-greatest state and local tax burden in the nation, according to the nonpartisan Tax Foundation. New Jersey’s income tax rates are among the nation’s highest, with our top marginal rate of 8.97 percent exceeding that of New York, Pennsylvania, Connecticut and Delaware.
The Garden State also offers the fewest income tax deductions to residents looking for tax relief. While many states and the federal government offer a deduction for charitable giving, New Jersey offers no such option.
Understanding the challenges faced by both our nonprofit community and state taxpayers, I have joined with Sen. Jennifer Beck (R-Monmouth) and Sen. Steven Oroho (R-Sussex) to introduce legislation creating a state income tax deduction for donations to New Jersey-based charities.
Several recent experiences have reinforced my belief that this is the right thing to do.
On a visit with Beck to the Boys & Girls Club of Monmouth County in Asbury Park last month, we learned how the organization helps children in need to realize their full potential as productive, responsible and caring citizens.
After talking with the amazing kids and staff members, I have no doubt that the entire Asbury Park community is better off due to the extensive support the Boys & Girls Club provides.
Two weeks later, Oroho and I visited Project Self-Sufficiency of Sussex County. We met with PS-S leaders, talked with participants and were impressed by the comprehensive array of family stability and personal and economic self-sufficiency services they offer to help low-income and at-risk families.
I am confident that many in the northwestern part of the state would be worse off if not for PS-S.
In my own personal life, I have worked with SAGE Eldercare to deliver “Meals on Wheels.” Many people would be shocked to learn how many of their elderly neighbors are at risk of going hungry, and some surely would if not for SAGE’s efforts.
While these organizations may seem vastly different, they and other New Jersey nonprofit groups share a few common threads. They provide critical safety nets for our most vulnerable residents, and they are funded through a combination of government grants and private donations.
Their revenue streams are uncertain even in the best of times. In difficult times, they can be volatile to the point of forcing smaller organizations to close completely. Programs that take years to build can fall victim to the next state budget crisis, and private donations quickly dry up during recessions.
The ability of New Jersey’s nonprofit organizations to fundraise has been further diminished by a flight of wealth from the state, not just of high-income earners, but increasingly of retirees and middle-class families looking to escape our high taxes. A study by Boston College measured the decline of the state’s charitable giving capacity at more than $1 billion in recent years as a result.
Imagine the additional cost to taxpayers if the state had to replace critical services that our nonprofit agencies could no longer afford to provide, should this decline continue.
Establishing a state income tax deduction for charitable giving will help reverse that trend and strengthen the state, its taxpayers and our nonprofit community.
While I don’t think many people will give to their house of worship, community food bank or local shelter just to claim a tax break, I do believe a deduction may help convince some already inclined to make a contribution to actually do so.
The cost would be manageable. Based on taxes paid by the average New Jersey household, the state would lose only $1 in revenue for every $30 in charitable donations. As noted previously, some of that charitable giving will offset the need for other government spending.
In the long term, this and other tax-relief efforts will help to strengthen New Jersey communities, reduce the state’s overwhelming tax burden and stem the flow of our friends, families and co-workers to other states.