According to an article in the San Jose Mercury News, charities are concerned about a provision in the president's tax plan that, if approved, would only allow tax credits for gifts given to "charities addressing poverty and its impact."

Nonprofit groups not involved in addressing issues related to poverty are not only concerned that the Bush plan will affect their donations but also that the provision creates a hierarchy among charities.

"The tax code should provide incentives for giving. But it [should] let people decide for themselves what to give to," said Sara Melendez, president of Independent Sector, a nonprofit coalition of foundations, nonprofit organizations, and corporations.

In the president's plan, taxpayers would receive a state tax credit of up to 50 percent of the amount of their gift to charities that address issues related to poverty. Donations from individuals of $500 or more would be eligible for the credit, while corporations and married couples would have to give at least $1,000 to be eligible.

The Bush administration maintains that money to fund the credit could come from the Temporary Assistance to Needy Families (TANF) program, which directs federal welfare block grants to the states to help families get out of poverty. However, no new federal money is expected to be directed to the program, said Leslie Lenkowski, a professor of philanthropy at Indiana University and a White House adviser.

Instead, the administration is expected to argue that because welfare rolls have declined substantially around the country, the surplus grant money could be used to fund the credit. According to the Department of Health and Human Services, the program ran a surplus of nearly $5 billion last year.

The bipartisan National Governors Association, for one, is concerned about diverting welfare funds to pay for the proposed credit. "Some of those dollars would be gone quickly'' if the economic slowdown pushes people back onto welfare rolls, said NGA director of human services Gretchen Odegard.