The Politics of Giving
The Philanthropy Roundtable’s Adam Meyerson talks about the future of charity, power grabs by the IRS, and pressures to create a nonprofit cartel.
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GoogleInterview by Katherine Mangu-Ward
Americans love to give away money. In 2008, as the economy flailed and the government bailed, we still donated $300 billion to charity, or about $1,000 per person. That figure includes everything from the Bill Gates/Warren Buffett charitable colossus to a bus driver at church dropping a $5 bill in the collection plate.
One reason for the ongoing frenzy of giving is the fact that Americans do not have to pay federal income taxes on money they hand over to philanthropic organizations. But as budgets get ever tighter, state and federal governments have started scrounging for change in the sofa cushions. In March 2009, spitballing about ways to pay for his health care overhaul, President Barack Obama suggested reducing rich people’s tax deduction for charitable giving.
The response from the nation’s schools, churches, museums, soup kitchens, and thrift shops was swift and angry. A coalition of charities and other groups concerned with giving—including the Philanthropy Roundtable, an association of foundations and other charitable organizations—sent a strongly worded letter to Senate Finance Committee Chairman Max Baucus (D-Mont.) declaring that “with so many Americans relying on the charitable sector, now is simply not the time to jeopardize the charitable gifts that are so important to its strength.”
Obama defended his proposal, arguing that if a donation is “really a charitable contribution, I’m assuming [the tax rate] shouldn’t be a determining factor as to whether you’re giving that $100 to the homeless shelter down the street.” The president also pulled out one of his favorite lines, noting that the tax hike would affect “only 1 percent of the American people,” but then he revealed perhaps more than he intended: “I think it is a realistic way for us to raise some revenue from people who’ve benefited enormously over the last several years. And, you know, ultimately, if we’re going to tackle the serious problems that we’ve got, then, in some cases, those who are more fortunate are going to have to pay a little bit more.”
If you think that’s just ordinary political boilerplate, remember that Obama wasn’t talking about an income tax or a capital gains tax. He was talking about a tax on money going to charities. The people he wanted to hit with a bigger tax bill are already “paying a little bit more.” They just don’t happen to be sending their money via the White House and Congress.
The proposal died, but the attitude behind the remarks continues to hover over American philanthropy. Comprehensive tax legislation is expected in 2010, and the revised rules may include new requirements for organizations with tax-exempt status. The Internal Revenue Service has already been gaining greater oversight of nonprofits in recent years, both by collecting more information about the groups and by increasing application fees.
At the state level, activists are agitating for laws mandating more diversity on foundation boards and more government control over how and where private philan- thropic dollars are spent. Even when the bills don’t pass, they often scare charities into making accommodations. In California, for example, the Greenlining Institute persuaded the State Assembly to consider the Foundation Diversity and Transparency Act, which would have mandated disclosure about the number of ethnic, sexual, and other minorities on the boards of large foundations and their grant recipients—an explicit step toward mandating quotas. After intense negotiations, the bill was withdrawn, and the state’s 10 largest foundations not coincidentally agreed to spend $20 million through minority-led groups serving minority communities, $10 million on leadership training and technical assistance to minority-led organizations, and additional cash for ongoing research and analysis about the role of minority organizations in the Golden State.
Adam Meyerson, president of the Philanthropy Roundtable since 2001, writes and speaks frequently about philanthropic freedom, donor intent, and the role of charitable giving in a free society. Senior Editor Katherine Mangu-Ward interviewed Meyerson at the Philanthropy Roundtable’s Washington, D.C., offices in November.
reason: What do you say to people who object to the fact that tax-exempt donations are going to the opera or to Harvard when there are genuinely needy people in the world?
Adam Meyerson: We’ve had a long tradition where, so long as they make contributions to genuinely charitable causes, Americans can decide where and how to give away their money voluntarily. We’re talking about voluntary action here. They could spend it on their yachts, but they want to give their money to other institutions.
Philanthropy and charitable giving are central to American life and have been since the beginning of the republic. Philanthropy supports our churches and synagogues, medical research, health care, the arts, the environment. Our colleges and universities are the best in the world thanks to philanthropy. If you look at almost every major controversial issue, whether that be abortion or gay marriage or stem cell research or marijuana legalization, the philanthropists are on both sides of those issues helping to promote and advance a really robust debate.
reason: Let me put it more bluntly. How would you reply to someone who says, “There are lots of poor black people in America. Why are white people giving money to each other to put on ballets?”
Meyerson: Let me give you two arguments. One illustrates the importance of freedom and the other is to look at what the philanthropist is actually giving to.
One of our great philanthropic heroes was Julius Rosenwald. He was one of the builders of Sears Roebuck. In the 1920s and ’30s, on a matching basis, he funded 5,000 schools for African-American children in the rural South. At one time, one-third of all African Americans owed their education to Rosenwald schools. That could not have been done without the freedom and independence of a donor to make decisions about where to spend his money. It wasn’t being done by the state. It couldn’t really be done by business. That’s a great strength of philanthropy that we see over and over again: the willingness to support an unpopular idea, something before its time.
Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.
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1. Be careful, the left will try to find any large pool of money and subvert it towards their own ends. Charity tends to be very wealthy, and such is very susceptible to this.
2. The idea that broad tax cuts count as a financing would only be true if all our money really belonged to the state and they were just letting us use it. Something the left is increasingly believing.
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So why are white people giving money to each other to put on ballets when there are lots of poor black people in America? I don't seem to be able to remember the answer to that question.
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Because it's their fucking money? Feel free to donate all your ballet season ticket money to poor black people, Vanneman. Go nuts.
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Ballets are the more deserving charity, so the answer is "Because people do the right thing sometimes."
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Good Morning reason with coffee coming out of my nose.
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I'm sure I could find a way to justify that statement, if I was called upon to do so.
I could even do so using pinko-speak:
"Arts groups benefit the whole community, and elevate our shared emotional and spiritual space, while direct payments to individuals benefit only those individuals."
Blah blah blah blah blah.
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+1
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The "poor black people" might be satisfied in knowing that, in spite of ballet, 200 million white Americans are dancing like poor black people.
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Nah, they still dance like white people
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Just shut the fuck up, Vanneman.
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Why was that question even in an article about tax deductible charitable donations? Last time I checked, I couldn't deduct those donations on my taxes.
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Actually maybe try reading? every study out there shows funding for the arts and animals and evironment has dried up, the only charities getting donations are the ones helping people, like feeding them, etc.
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The people he wanted to hit with a bigger tax bill are already “paying a little bit more.”
The rub is that they are gifting to organizations of their choosing, and in many cases those chosen charities are not affiliated with someone the president needs to reward for helping him get into office. And except for the tax break, with private sector donations the benefitting group cannot credit the government for their gift.
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How dare they help others in a way they see fit, not in accordance with the priorities assigned by our elite dear leader!
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Not only are they already paying more. They are paying a higher percentage of their income.
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A few years ago there was a disturbing set of proposals to actually abolish the little guys. Eliot Spitzer, who was then attorney general in New York, actually proposed that foundations with less than $20 million in assets should not be allowed to exist. One argument he made was that there were too many foundations, and it was hard for the IRS and state attorneys general to monitor and keep track of all of them.
Jesus, Spitzer is a cockroach. I don't say this about many politicians in the free world (Jacqui Smith is the only other one I can think of), but I will actually be happy when that worthless piece of sub-human shit dies.
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"Jesus, Spitzer is a cockroach."
You really hate cockroaches, don't you?
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And I live in Florida, with the disgusting palmetto bugs. For those who don't know, that's a two inch flying cockroach.
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I never slept with a hooker
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If there has to be a tax then it should tax the charitable organizations, not the donors.
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That's retarded. There doesn't have to be a tax and taxing charities is stupid and counter-productive.
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I am not against taxing charities that fail to spend most of the money on programs. There is nothing charitable about spending more than 25% on administration.
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@tide you assume the charity's job is just handing out money. Most of the time there are a lot of meetings, coordination, events, and so forth that go into making charities successful, and those things require planning and overhead.
If a charity is 100% spending on programs, they are essentially doing nothing long-term, just handing out money. Organizations need administration.
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I follow http://www.charitywatch.org
Interesting that I could not find the charity linked to you handle. I never said 100% spending on programs but I do feel 75% is the right amount. -
Is any one really surprised that the government is trying to choke out competition? The people in government and their useful idiot friends know that with more people/organizations looking to the government for their subsistence or approval the easier it will be for government to broaden its powers. Charities show that this expanded government is not necessary and is less efficient.
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Of course not. Look at what they're doing to Toyota.
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Back lot of the White House:
We need to reach out to Toyota, but first we need to get their attention. Get all of their planet killing cars off the roads first, then we will offer them a deal.
They speak Toyotan, so find a native to negotiate with them and make sure he looks native for the cameras.
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Nonetheless, some prominent legislators have been saying that tax preferences amount to an earmark, a gift from the government.
Given the enthusiasm and dynamism in the nonprofit sector, why aren't those prominent legislators saying that more people should be able to utilize more of their money as those people think best?
You answered my question, mr simple.
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Spitzer is a cockroach
That's Once and Future NYS Governor Cockroach to you.
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"I'm a fucking steamroller!"
He should get what happened to Kevin Kline.
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Giving is always a good thing is it not?
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Why does Vanneman think black people don't want to go to the ballet?
Do you think they aren't capable of appreciating it, Alan? Or is it just that you don't want "those people" sitting next to you?
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1) It's because they can't afford it without the government!
2) Black culture is different than racist honkey european motherfucker culture and needs to be equal.
Am I getting the lingo right?
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Why does Vanneman think black people don't want to go to the ballet?
I call BS. That's got to be a parody.
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"We see this in the field of medical research as well, which is overwhelmingly dominated by government." I'm bookmarking that one for later.
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As usual, a magnificent magnus opus from a tremendous thought leader. However, my view is that we should eliminate the charitable deduction. Given that Reason has been utterly unsuccessful at eliminating excessive senior benefits, we are going to have to find a way to raise taxes in one way or another. In my mind, one okay way to accomplish this is to widen the tax base. I appreciate it when people give money to charity, but I do not think this should debilitate the tax base, thereby raising taxes on other forms of activity and future taxpayers. If people want to give money to their local hospitals and alma matters, by all means do so. But this shouldn't lessen their tax obligations. Starve the Leviathan has been a failure now for three decades. The only way to lower taxes in the long run is to cut spending.
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Americans do not have to pay federal income taxes on money they hand over to philanthropic organizations
What's remarkable is that some of the 65% of us who don't itemize, and for whom the above sentence is therefore incorrect, give too.
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Very true! I've always given, but it does feel a little better now (and I might give a little more too).
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Try doing your giving via http://givv.org. It's easy and convenient (and free.)
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From here:
Ironically, the widely expressed fear that people won't voluntarily help those who can't help themselves -- the foremost objection to the free market -- is self-refuting. If everyone is concerned about the poor primarily, then what's the problem? Religionists and secularists of virtually all stripes proclaim identical sentiments when it comes to aiding the less fortunate. And yet we have this theater-of-the-absurd chorus with each member wailing that he alone cares about his fellow man.
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If Spitzer wanted to hose foundations smaller than $20MM, I can only assume as NY AG he was finding scam foundation after scam foundation. Given that his beat encompassed Wall Street, AKA the world HQ of shady money, this seems likely.
But I admit to being very surprised about that revelation, and give props to Reason for this piece. I'm interested to find out more.
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The first three questions were:
reason: What do you say to people who object to the fact that tax-exempt donations are going to the opera or to Harvard when there are genuinely needy people in the world?
reason: Let me put it more bluntly. How would you reply to someone who says, “There are lots of poor black people in America. Why are white people giving money to each other to put on ballets?”
reason: Charities in America get preferential tax status, under the 501(c)3 provision of the Internal Revenue Code. Various players argue that this tax status means charitable organizations are, in some sense, funded with public money.The basic premise of all three is that all money belongs to the government and we should be grateful that it lets us keep some. FALSE
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Check out http://givv.org/recipients?q=liberty
I created because I wanted an easier way to support all the freedom/liberty groups (there are a bunch of good ones).
I think there's a better model for charity than the old "send a check at the end of the year" - it's to send smaller microdonations to lots of charities at once, every month. If we all do that, the transparency, knowledge, and convenience go up while the hassle, privacy violation, and cost go down. Check it out.
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One more important consideration is that those who set up foundations have a desire to share with others and sufficient assets to make a difference. You leftists forget that with assets come options. Try to tax away their wealth and they will move, right Arnold? Try to expropriate the assets they have set aside to help others and they will move the assets. If you want to live in a country that believes this way, Cuba is only 90 miles away. Or you could go stay with Komrade Hugo.
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No, not everybody who sets up foundations has this goal, you simplistic jackass.
US foundations are a means to bury capital beyond the reach of tax law. That they are commonly used as a structure in philanthropic financial engineering does not magically make every foundation legitimately philanthropic. Not on this planet.
Good luck with your precious bodily fluids.
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Simplistic jackass is a little harsh. I don't think people who don't come from money know how the game is played.
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Okay, fair enough. I was too harsh.
Then again, I don't come from money either, and you don't find me equating leftism with communism.
What exactly is it about the right-wing POV that favors running one's mouth when one knows jack shit of what they speak?
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I don't know but it is stereotypical. I find it interesting to read what libertarians and conservatives have to say.
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Why was that question even in an article about tax deductible charitable donations? Last time I checked, I couldn't deduct those donations on my taxes.
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I like your point! It is of wisdom.
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