WASHINGTON – President Barack Obama's proposed budget will harm fundraising for nonprofit hospitals by thwarting wealthy donors, according to the Association for Healthcare Philanthropy.

The AHP is particularly concerned about Obama's proposals to reduce tax deductions for charitable donations and freeze discretionary spending.

"Nonprofit hospitals are struggling to keep up with the burgeoning numbers of under- and uninsured Americans that are seeking medical care in their local community emergency rooms," said William C. McGinly, president and CEO of the AHP. "A limit on charitable deductions aimed at those who are in a financial position to make the most significant contributions sends the wrong message at the wrong time."

McGinly said hospitals have cut back on spending, mainly at the expense of necessary capital improvements. He suggested that a three-year discretionary spending freeze would reduce the ability of state and local governments to provide health-related grants and Medicaid funding, making it imperative for individuals, businesses and foundations to step up their philanthropic support.

The AHP is a not-for-profit organization whose members direct philanthropic programs in 2,200 of North America's not-for-profit healthcare providers.

A December survey of AHP members found that three out of four increased involvement with donor relations and many put more emphasis on major gifts. Almost half applied for more grants and put more energy into annual giving and planned giving programs, while at the same time more than half reduced their fundraising budgets and about one-quarter decreased staff.

Despite these extra efforts, McGinly said, 85 percent of survey respondents said their philanthropy programs were negatively affected by the economy last year, forcing almost half to downgrade giving projections for the year.

Overall, far fewer major gifts were secured, with 40 percent of respondents reporting declines in revenue from government and private grants, 80 percent citing declines in investment income and 43 percent seeing a significant decrease.

Twenty-seven percent of development organizations used more of the money they raised in 2009 to meet increased demands for hospital charity care, the report found. McGinly said this highlights the increased need for philanthropic support to cover costs that nonprofit hospitals are no longer able to fund from decreasing margins.