The Obama Administration is proposing changes to the tax code that will cap the deduction for charitable gifts at 28%. The theory is that lower income people pay 28% marginal taxes, and their charitable giving saves them 28%. High income people pay 36% marginal taxes, so their gifts save 36%. Since the savings is greater, this is unfair to poor people, so the logic goes. But the question is less about fairness to poor people and more about the fairness to charities.

Watching President Obama's press conference last week, we saw the President muse that he suspects people don't give for the tax deduction, and thus giving wouldn't change. I suspect he was trying to say that people shouldn't give for the tax deduction. In the March 12, 2009 Chronicle of Philanthropy, many articles looked closely at the behavior of what people actually do, and not what they should do.

The tax code was changed in a similar way that Obama is proposing back in 1987. According to the article titled "A Taxing Proposition", authors Suzanne Perry and Caroline Preston note that giving dropped from $127 billion in 1986 to $114 billion, about 10%. The article states that there was a surge in giving in 1986 by 14.8%, showing that people who do give, also care about paying taxes. Since the Obama plan would go into effect in 2011, charities should hope that giving will go up between now and then. Unfortunately, we are in a recession, where giving typically does not go up.

In the same issue, there is an article titled "Economists Try to Calculate the Impact of Tax Changes on Charitable Giving" by Suzanne Perry. She states that the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution estimates Obama's proposal would cause a $9 billion drop in giving. We can also only imagine that corporations are giving less as they are in hard economic times.

So, what should a charity do? The most important thing they can do is to prepare for difficult times. They are probably experiencing these difficulties already, and it is critical that they be able to focus on what is important to them. A strategy map is a great tool to be able to help an organization decide what it should be doing, and to communicate to all employees and volunteers what it should be doing as well as what it should not be doing. Using a map and performance measures will allow an organization to retain that focus as well as better communicate its impact to its donors and stakeholders.