Look at the structure of the argument:

- A proposed change would eliminate deductions from taxable income for donations.
(the donations one makes to charity are usually deducted from taxable income i.e. one doesn't need to pay tax on them. Eliminating deductions means one would need to pay tax on charity donations too)

- If this change were adopted, wealthy individuals would no longer be permitted such deductions.
(wealthy individuals would have to pay tax on donations too)

Conclusion: Many charitable and educational institutions would have to reduce services, and some would have to close their doors.

This is a big jump from eliminating deductions to charitable instis closing down their doors.

There are a few assumptions here:
1. If donations are made non deductible, some wealthy people will reduce/stop donating.
2. If wealthy people reduce/stop donating, charitable instis will not be able to manage the current services.

Mind you, there is NO assumption that no one else donates (e.g. the Govt) and that these individuals are the only source of funding. The assumption is that wealthy people not donating will have an impact. So options (B) and (D) are incorrect.

Option (A) corresponds to assumption 1 above and is the answer.