The New york Times reports –

Wealthy donors and the nonprofit groups they support were in an uproar over the Obama administration’s proposal to limit the value of deductions for charitable gifts, which was included in the budget the president presented to Congress.

Among donors, the concern was one of being forced to limit donations when charities need the support the most.

Charity trade associations echoed the unease. Nonprofit groups have been urging the administration and Congress to increase incentives for charitable giving by raising the limits on deductions and eliminating taxes on the investment income of foundations.

“In these hard economic times, we need to make sure tax and regulatory policy encourages growth in philanthropy,” said Steve Gunderson, chief executive of the Council on Foundations.

Under the administration’s proposal, taxpayers earning more than $250,000 will have their ability to deduct contributions to charities reduced to a rate of 28 percent from a rate of 35 percent, according to an analysis by the Union of Orthodox Jewish Congregations.

That organization called on Mr. Obama to “immediately remove” the proposal limiting charitable deductions while commending him for a “bold and honestbudget plan.”

Fund-raising experts had a more subdued reaction.

“Research has shown again and again that for major donors, taxes are at the bottom of their list of reasons why they make these gifts,” said Margaret Holman, a fund-raising adviser in New York. “They make these gifts because they love, are intrigued by, want to invest in their favorite charities.”

Roughly half of the high net-worth donors responding to a 2006 survey by the Bank of America reported that they would keep giving the same amount to charity if deductions for that giving fell to zero, while about 38 percent said their giving would decrease somewhat. Only 7 percent said their gifts would fall steeply.

Eli Broad, who has made some of the biggest gifts in recent years, said through a spokeswoman that his giving would not be affected, as he has already donated far more than he can deduct.

Robert F. Sharpe Jr., a fund-raising expert in Memphis, said many of the wealthiest donors are already limited to deductions of 28 percent for their charitable gifts because they are subject to the alternative minimum tax.

Congress has long debated whether donors should get the same subsidy for gifts to wealthy universities and art groups that they get for contributions to nonprofit groups serving basic needs like food, shelter and health care.

“The administration’s proposal is doing just that, reordering charitable priorities by taking money wealthy people would have given to other charities and making it go into the health care system” through higher taxes, Mr. Sharpe said.

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