A group representing charitable organizations said it is concerned about a proposed cap to the charitable tax deduction included in President Obama's budget plan.

The proposal would increase economic hardship for millions of people served or employed by the charitable sector, the Charitable Giving Coalition said Wednesday.

During a speech to unveil his budget plan, the President referred to some tax incentives used by the wealthy and large corporations as loopholes that need to be closed.

“If we're serious about deficit reduction, then these reforms have to go hand-in-hand with reforming our tax code to make it more simple and more fair, so that the wealthiest individuals and biggest corporations cannot keep taking advantage of loopholes and deductions that most Americans don’t get,” said Obama. “That's the bottom line. If you're serious about deficit reduction, then there's no excuse to keep these loopholes open. They don't serve an economic purpose. They don't grow our economy. They don't put people back to work. All they do is to allow folks who are already well-off and well-connected game the system. If anyone thinks I’ll finish the job of deficit reduction on the backs of middle-class families or through spending cuts alone that actually hurt our economy short-term, they should think again.”

In response to the President’s comments, the coalition said, “The charitable deduction is not a loophole, it’s a lifeline. It serves an invaluable economic purpose, supporting worthy causes and the nonprofit sector, which employs more than 13.5 million people, or 10 percent of America’s workforce and generates hundreds of billions of dollars in economic activity. Make no mistake, the burden of unraveling the charitable deduction would be placed squarely on the backs of the middle class and the most vulnerable who rely on charitable giving and the vital community services it supports.”

The coalition added, “Far from ‘gaming the system,’ donors give to charities because they want to support innovation and solve problems in communities, with no personal benefit to themselves. The charitable deduction is different than other itemized deductions because it encourages individuals to give away a portion of their income to benefit others, not themselves. It rewards a selfless act and allows a way for donors to give more than they otherwise would have.”

The coalition, a diverse group of more than 60 nonprofits, foundations and other charitable organizations, said it is united like never before in an effort to make the strongest possible case to lawmakers to preserve the charitable deduction as they negotiate the budget

“We strongly urge you to reconsider your Administration’s FY 2014 Budget proposal (or any similar proposals) to limit the value of itemized deductions for charitable contributions,” the coalition said in a letter sent to President Obama Wednesday. “Although strong and supportive statements from members of your Administration and lawmakers about the value and importance of charitable giving in our communities are encouraging, numerous budget and tax reform proposals calling for cuts, caps, floors or limits to itemized tax deductions—including the charitable deduction—indicate otherwise.”

The letter argues the importance of preserving existing policy to make sure lawmakers clearly understand that giving will decline significantly and communities will suffer if they tamper with the charitable deduction. “We appreciate that there are significant decisions ahead to address our fiscal challenges,” the letter continued. “But, tampering with the 100-year-old charitable deduction is not a viable solution. Such a move would spell disaster for the vital programs and services of thousands of charitable organizations and the millions of Americans who rely on them each day.”

The coalition also pointed out that Americans want to protect the charitable deduction. A United Way Worldwide survey found that nearly 80 percent of Americans believe that reducing or eliminating the charitable tax deduction would have a negative impact on charities and the people they serve. Two out of every three Americans (67 percent) are opposed to reducing the charitable tax deduction.

As part of its ongoing effort to educate lawmakers and the public about what is at stake, the coalition launched ProtectGiving.org last week. The Web site includes information about the role and impact of the charitable deduction, updates about Coalition activities and ways for stakeholders to take action by voicing their support of efforts to protect and strengthen charitable giving.