Will Charitable Giving Decline Under Proposed Plan?

Credits: Robert Benincasa and Mor Vimmer / NPR

Credits: Robert Benincasa and Mor Vimmer / NPR

 Have you heard about a White House proposal to eliminate much of the tax benefit for charitable donations?

If you caught the details, it is only for those who make $250,000 a year and above, so you may feel the debate will not affect you either way. It is interesting however to consider two questions:

The first would obviously be for anyone who makes over $250,000 per year,

Would a change in the tax laws cause you to change the way you give?”

The second question we should consider is this:

“If I make far less that $250,000 a year, does this have anything to do with me?

I have been hesitant to weigh in on this particular issue because frankly, much of the chatter in the news and on the web seems to angling away from the concept. However, I cannot stay on the sidelines completely because there is too much at stake. Here is the issue:

Charitable giving is part of this nation’s moral fabric. Non-profits have traditionally been part of our policy making process and an important implementation arm of many government programs. They are also the vehicle which enables us to focus resources and effort toward issues we care about, regardless of government action.

Whether you think of the Salvation Army or a local youth program in your city, there is an important connection between communities and non-profits. It is the one area where we choose, on our own, to make a difference; to improve our community.

We all understand that this economy calls for change; it calls for new thinking. But should new thinking seek to innovate beyond the boundaries of common sense or human values?  It was remarkable for me to learn as I have travelled the world in my current capacity, how “uniquely American” charitable giving really is. There is no other nation on earth that commits so much, so voluntarily, to help those in need. And we seem to have a sense of what real need is.

48% of our giving is in the area of health and human services. The rest is balanced among areas such as education, religion, the arts and the environment. It is a balance we choose because it is important to us as a society; no one forces us to do it. 

I cannot answer the first question posed, but I would certainly welcome comments. On the second question, I fear I do know the answer: 

37% of all charitable donation deductions were taken by people making more than $200k in 2006. Which equates to $109.1 billion of the $295 billion given to charity in 2006. If you impact that giving, what happens to programs? If services and programs in your community were to loose 37% of their funding on top of what is already happening economically, we will all be faced with growing need, diminishing resources and the most painful of questions.

When services and programs in our communities begin to go away because those with a greater capacity to give begin to give less, we will all be faced with growing need, diminishing resources and the most painful of questions. If we are no longer helping ourselves in these areas of need, who will be able to help us then? The government? Probably not. The fact is most government aid programs only work as well as they do because of the charitable and volunteer programs across this country. Can we really afford to loose this “safety net” for society? 

I suppose it would be prudent to consider the wisdom of opening this door at all. Where does it lead? While I am not opposed to the general concept of closing tax loopholes in order to stabilize the economy, I do not view charitable giving as the major method by which the super-rich “beat the system.” In my experience, there is more to giving than that, and I would urge everyone to keep an eye on this issue and be prepared to contact their representatives should it progress.  

In the meantime, now is the time to recognize the enormous amount of good charitable donations provide for all of us – donors, recipients and volunteers.

Would love your thoughts or responses.

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2 Comments

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2 responses to “Will Charitable Giving Decline Under Proposed Plan?

  1. I agree with your comments and believe that taking away any incentive for donors makes bad sense. Government is an inefficient means to allocate resources in many cases (except national defense, infastructure and other “major” nationally-focused programs) and taking the individual donor out of the mix and substituting governmental “grants” will depress giving. This plan seems to be very short-sighted and will actually hurt the economy.

  2. I follow your blog for a long time and must tell that your articles are always valuable to readers.

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