Searching for money to corral a projected budget deficit, Gov. Neil Abercrombie and state lawmakers in 2011 placed temporary caps on itemized deductions by higher-income taxpayers.

The rationale was that the wealthy could afford to lose some tax relief to help the state out of a fiscal crisis. But as is often the case with changes to tax policy, there have been unintended consequences.

Many wealthy donors say they have reduced their charitable donations — which count toward the caps on itemized deductions — bleeding nonprofits that are already hurting from cuts in state and federal support.

A bill pending before Abercrombie would remove charitable donations from the caps, which are scheduled to remain in place until January 2016. The exception for charitable donations would cost the state about $12 million a year, but Abercrombie, who is expected to sign the bill into law, has said the state is in a better financial position than it was two years ago. The governor and lawmakers have also recognized the impact the caps have had on nonprofit and charitable organizations.

“It primarily benefits nonprofits,” said House Majority Leader Scott Saiki (D, Downtown-Kakaako-McCully), who sponsored House Bill 430.

Saiki said he thought it was appropriate two years ago to include charitable donations in the caps on itemized deductions, but circumstances have changed, so lawmakers revisited the issue.

Dozens of nonprofits — and several wealthy donors — have asked the governor and lawmakers to make an exception for charitable donations.

“It was really clear that people were caught by surprise about the itemized deduction cap and really felt that it was having an impact on individuals and families decisions’ to give,” said Kelvin Taketa, president and chief executive officer of the Hawaii Community Foundation.

At the time, Abercrombie and lawmakers were discussing several tax policy options to close a projected deficit — including a pension tax, which failed, and the temporary suspension of general excise tax exemptions on several business activities, which passed — so the caps on itemized deductions were relegated to a minor role in the debate.

“I think they looked at this and saw a revenue replacement strategy for some other things they were trying to do that did not have enough support,” Taketa said. “And they put that in there without even realizing the ramifications of what it was going to mean.”

Gov. Linda Lingle had sounded the alarm in 2010 after the Legislature approved a similar bill that would have capped itemized deductions. Lingle vetoed the bill, calling it a “de facto tax increase,” and specifically cited the concern among nonprofits that the ability to raise funds through charitable giving would be adversely affected.

The state law passed two years ago placed temporary caps on itemized deductions based on federal adjusted gross income. For taxpayers earning $100,000 a year or more and filing single returns or married people filing separately, the cap is $25,000. For taxpayers making $150,000 a year or more and filing as heads of household, the cap is $37,500, and for taxpayers earning $200,000 a year or more and filing joint returns, the cap is $50,000.

The Tax Foundation of Hawaii told lawmakers that while the bill to exempt charitable donations from the caps “panders to the charitable community,” it ignores the complexity created by establishing different income thresholds on itemized deductions for state and federal tax purposes.

Under federal tax law, limits on itemized deductions are triggered at the $250,000 threshold for single taxpayers, $275,000 for heads of household and $300,000 for joint returns.

The Congressional Research Service, using Internal Revenue Service data, found that 33 percent of federal taxpayers in 2010 claimed itemized deductions rather than the standard deduction. In Hawaii the state Department of Taxation has not updated its research on state income tax patterns since 2008 — for the 2005 tax year — because of budget constraints, but patterns have shown that more than half of state residents who file tax returns itemize.

Higher-income taxpayers are more likely to itemize, research has found, and are also more likely to claim the charitable deduction.

Research also has shown that the charitable deduction is an important incentive for charitable giving. As The Nature Conservancy told lawmakers, while many people give for altruistic reasons, “the words ‘your contribution is tax-deductible’ are music to a donor’s ears.”

Nationally, the Giving USA Foundation estimated that there was $298 billion in charitable giving in 2011. In Hawaii the Hawaii Community Foundation has calculated charitable giving at around $600 million a year.

Many social-service advocates who argued during the recession that the wealthy should pay a greater share of taxes have defended the tax incentive for charitable giving because of the benefit to nonprofits.

Some have had to delicately maneuver around the inescapable fact that many higher-income taxpayers will not give money — or will not give as much money — without the tax break.

Nonprofits that help the needy have been besieged over the past several years by cuts to state and federal support as the demand for social services increased.

“We’re getting it from all angles, in terms of things that make it harder and harder to have the revenue to deliver the services that we’re equipped to provide,” said Howard Garval, president and chief executive officer of Child & Family Service. “So that’s the bottom line, I think.”

Lisa Maruyama, president and chief executive officer of the Hawaii Alliance of Nonprofit Organizations, said nonprofits have often heard from public officials that they have to weather the storm with private donations when government is unable to sufficiently help.

But the caps on itemized deductions have squeezed charitable giving, according to anecdotal evidence.

“We’ve gotten word from organizations that receive letters in response to capital campaigns or other types of large fundraising initiatives where the donor has said, ‘I am not giving this year,’ or ‘I am giving less,’ or ‘I was giving to 30 organizations, but I’m going to cut back to 15,'” Maru­yama said.

Wealthy donors often give to many charities, so the decision by a few donors to cut back because of tax implications can reach across the nonprofit sector.

“Many of the high-income or high-net-worth individuals who are affected by this legislation are the key people that support not just one, but multiple charities,” said Donna Vuchinich, president and chief executive officer of the University of Hawaii Foundation.

Marilyn Cristofori, chief executive officer of the Hawaii Arts Alliance, said she has heard directly from past donors who will either not give or will not give as much because of the tax change. She said some could afford to donate without the tax break but refuse as a matter of principle.

“They were very clear about it,” Cristofori said.

Jean Rolles, vice president for community relations at Outrigger Enterprises Inc., told lawmakers that her accountant informed her that it is no longer possible for her to continue contributing to charity at the level she had in the past because of the caps on itemized deductions.

“People donate when they have an incentive to donate,” she said. “I mean, other than their good nature, if they know they’re going to get a tax relief out of it, they’re more willing to donate.”