Another way of looking at the question is, What is it that philanthropists actually support? One-third of charitable giving is in religion. If you want to take away people’s freedom to support religion, that’s very serious. Colleges and universities don’t just exist for rich people. Colleges and universities provide opportunity for everybody. Much of the money goes in to support scholarships for those who can’t afford the tuition. The research that’s done at colleges and universities, whether that’s medical research or environmental research, it has benefits for the entire society. When you support a hospital or medical research, that helps everybody. That’s not just supporting privilege. It would be disastrous for our country to take away the freedom to support religion, education, medical research.
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.
Once you accept that premise, strange things begin to happen. Some politicians want “their” money back, to spend on other things. And activist groups argue that private charities should be more heavily regulated.
Meyerson: We have been hearing more and more of that, both from legislators and from people within the charitable sector itself. Among big nonprofits there can be an impulse for a kind of cartelization, as often happens within industries. People often want to regulate their competitors.
All the legal precedents, including an opinion by Justice William Brennan, show that foundations do not lose their freedom, their independence, or their rights when they take advantage of tax preferences. Nonetheless, some prominent legislators have been saying that tax preferences amount to an earmark, a gift from the government. And more dangerously, I think, politicians put extra-legislative pressure on foundations and other donors to give to their favorite causes. It’s almost a kind of blackmail where political leaders threaten harmful legislation unless their favorite causes are funded.
reason: You’re referring to things like the Foundation Diversity and Transparency Act in California.
Meyerson: There’s wonderful diversity within the philanthropic sector. That diversity mostly takes place between or among organizations, not necessarily within organizations. Many organizations freely choose to have a diverse racial makeup of their boards and staff. If that’s what they want, we have no problem with those decisions, but we think that the issue of diversity is being lionized without much justification.
When the Greenlining Institute began back in the early 1990s, it focused on banking and financial lending institutions that allegedly practiced “redlining” and was very involved in passage of the Community Reinvestment Act. It turned its attention to private philanthropy four years ago with a plan to “democratize philanthropy” [by stocking the boards of private charities with minority members]. Its targets are large foundations, and its mission is to redirect private foundation assets to advance its own goals through its preferred organizations. These actions are conducted without regard for the mission of the private foundation or its right to direct its assets to causes consistent with donor intent.
Even with something like intellectual diversity, you don’t necessarily want widely different theories in one charity of what the mission of the organization is supposed to be. It’s a nightmare recipe. And yet that would be the consequence of some of the calls for diversity—a kind of paralysis within organizations.
Let me give a couple of examples of how mandating diversity may be inappropriate: It would be inappropriate to require, let’s say, a Jewish or a Catholic or a Mormon foundation to have members from another faith on its board. It would be inappropriate to require that family foundations have non–family members on their board. If there’s a Latino family foundation, does it have to have Anglos on its board in order to make wise decisions, let’s say, about Arizona? That’s both false and insulting. Should a liberal foundation be required to put conservatives on its board? It can if it wants, but it doesn’t make any sense. It defeats the whole purpose of philanthropy to require that kind of decision.
reason: You mentioned concerns about cartelization, and the possibility that larger charities might want to use the tax code to regulate their competitors. Talk a little bit about the relationship between the big guys and the little guys.
Meyerson: 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. And Spitzer was not alone in this. In 2005 the then-chairman of a large philanthropic association made a similar proposal in an article in The Chronicle of Philanthropy, saying that we shouldn’t have foundations with less than $1 million in assets.
Just as in business, you often start small in philanthropy and you do a lot of learning by doing. It would be devastating to charitable giving and to philanthropic learning to close off the opportunity to begin one’s foundation on a small scale, quite apart from the outrageous assault on freedom that’s involved.
Small players are trying to enter the space and just figure out what works. Several years ago, there was a white paper proposed by the Senate Finance Committee staff proposing that tax-exempt status be contingent upon accreditation. Having seen the dangers of accreditation in higher education—for instance, in the Thomas Aquinas College case, where the regional monopoly sought to deny accreditation to a college because it didn’t approve of its Great Books curriculum—we resisted this very strongly and argued that that was a very serious threat to philanthropic freedom. We haven’t seen that proposal emerge in recent years, but there’s new attention to a similarly damaging proposal: The IRS is proposing to get involved in assessing the governance of foundations and even their effectiveness, something that it has no statutory authority to do. There’s a serious proposal to create a self-regulatory agency under the control of the IRS, and we fear that that would be an open invitation for the kind of cartelization impulses that we sometimes see in this industry.
reason: For-profit charity sounds like an oxymoron, but it’s become increasingly common. I’m thinking here not only of online microlenders like Kiva or Prosper but also charities that aim to make investments that eventually turn a profit, like the X Prize or Google.org. How are they changing the landscape?
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.
Doc Merlin|2.23.10 @ 7:25AM|#
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.
Alan Vanneman|2.23.10 @ 7:30AM|#
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.
BakedPenguin|2.23.10 @ 7:53AM|#
Because it's their fucking money? Feel free to donate all your ballet season ticket money to poor black people, Vanneman. Go nuts.
Fluffy|2.23.10 @ 8:11AM|#
Ballets are the more deserving charity, so the answer is "Because people do the right thing sometimes."
Suki|2.23.10 @ 8:25AM|#
Good Morning reason with coffee coming out of my nose.
Fluffy|2.23.10 @ 8:33AM|#
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.
Suki|2.23.10 @ 8:36AM|#
+1
ed|2.23.10 @ 8:14AM|#
The "poor black people" might be satisfied in knowing that, in spite of ballet, 200 million white Americans are dancing like poor black people.
Almanian|2.23.10 @ 9:24AM|#
Nah, they still dance like white people
Warty|2.23.10 @ 8:43AM|#
Just shut the fuck up, Vanneman.
CS%|2.23.10 @ 11:13AM|#
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.
|2.23.10 @ 11:27AM|#
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.
Fist of Etiquette|2.23.10 @ 7:47AM|#
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.
|2.23.10 @ 11:28AM|#
How dare they help others in a way they see fit, not in accordance with the priorities assigned by our elite dear leader!
Zeb|2.23.10 @ 12:27PM|#
Not only are they already paying more. They are paying a higher percentage of their income.
BakedPenguin|2.23.10 @ 7:51AM|#
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.
Nitori Kawashiro|2.23.10 @ 10:18AM|#
"Jesus, Spitzer is a cockroach."
You really hate cockroaches, don't you?
BakedPenguin|2.23.10 @ 10:36AM|#
And I live in Florida, with the disgusting palmetto bugs. For those who don't know, that's a two inch flying cockroach.
cockroach|2.23.10 @ 1:17PM|#
I never slept with a hooker
RichN|2.23.10 @ 8:46AM|#
If there has to be a tax then it should tax the charitable organizations, not the donors.
mr simple|2.23.10 @ 8:53AM|#
That's retarded. There doesn't have to be a tax and taxing charities is stupid and counter-productive.
the tide|2.23.10 @ 1:24PM|#
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.
Jason|2.23.10 @ 10:26PM|#
@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.
the tide|2.23.10 @ 11:12PM|#
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.
mr simple|2.23.10 @ 8:52AM|#
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.
KPres|2.23.10 @ 9:07AM|#
Of course not. Look at what they're doing to Toyota.
John Tagliaferro|2.23.10 @ 9:53AM|#
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.
|2.23.10 @ 6:00PM|#
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.
Rhywun|2.23.10 @ 9:21AM|#
That's Once and Future NYS Governor Cockroach to you.
BakedPenguin|2.23.10 @ 10:41AM|#
"I'm a fucking steamroller!"
He should get what happened to Kevin Kline.
|2.23.10 @ 9:25AM|#
Giving is always a good thing is it not?
Jess
www.complete-anonymity.cz.tc
|2.23.10 @ 9:30AM|#
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?
John Tagliaferro|2.23.10 @ 10:10AM|#
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?
Rhywun|2.23.10 @ 10:05AM|#
I call BS. That's got to be a parody.
RCTL|2.23.10 @ 10:10AM|#
"We see this in the field of medical research as well, which is overwhelmingly dominated by government." I'm bookmarking that one for later.
|2.23.10 @ 10:14AM|#
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.
Rhywun|2.23.10 @ 10:30AM|#
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.
CS%|2.23.10 @ 11:15AM|#
Very true! I've always given, but it does feel a little better now (and I might give a little more too).
Jason|2.23.10 @ 10:27PM|#
Try doing your giving via http://givv.org. It's easy and convenient (and free.)
Barry Loberfeld|2.23.10 @ 12:33PM|#
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.
Pingback| 2.23.10 @ 12:50PM
Political Digest 23 Feb 2010 « The Republican Heretic links to this page. Here’s an excerpt:
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The Crossed Pond » The Politics of Giving links to this page. Here’s an excerpt:
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Instapundit » Blog Archive » TRYING TO CREATE a nonprofit cartel?… links to this page. Here’s an excerpt:
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Obama Attacks Charitable Giving - Grasscity.com Forums links to this page. Here’s an excerpt:
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Noya Khobor » Blog Archive » The Politics of Giving – Reason Magazine links to this page. Here’s an excerpt:
|2.23.10 @ 10:12PM|#
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.
|2.23.10 @ 10:15PM|#
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
Jason|2.23.10 @ 10:24PM|#
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.
|2.23.10 @ 10:39PM|#
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.
|2.23.10 @ 11:15PM|#
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.
u r right|2.24.10 @ 1:27AM|#
Simplistic jackass is a little harsh. I don't think people who don't come from money know how the game is played.
|2.24.10 @ 5:25AM|#
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?
u r right|2.24.10 @ 11:19AM|#
I don't know but it is stereotypical. I find it interesting to read what libertarians and conservatives have to say.
Pingback| 2.23.10 @ 11:55PM
The Politics of Giving – Reason Magazine | Drakz Free Online Service links to this page. Here’s an excerpt:
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The Politics of Giving – Reason Magazine | Drakz Free Online Service links to this page. Here’s an excerpt:
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The Politics of Giving – Reason Magazine | Drakz Free Online Service links to this page. Here’s an excerpt:
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The Politics of Giving – Reason Magazine | Drakz Free Online Service links to this page. Here’s an excerpt:
Pingback| 2.23.10 @ 11:59PM
The Politics of Giving – Reason Magazine | Drakz Free Online Service links to this page. Here’s an excerpt:
Pingback| 2.24.10 @ 1:09PM
The Politics of Giving – Reason Magazine links to this page. Here’s an excerpt:
Pingback| 2.25.10 @ 9:11AM
The Politics of Giving | Drakz Free Online Service links to this page. Here’s an excerpt:
Pingback| 2.25.10 @ 9:12AM
The Politics of Giving | Drakz Free Online Service links to this page. Here’s an excerpt:
Pingback| 2.25.10 @ 9:12AM
The Politics of Giving – Reason Magazine | Drakz Free Online Service links to this page. Here’s an excerpt:
Pingback| 2.25.10 @ 10:35PM
The Politics of Giving | Drakz Free Online Service links to this page. Here’s an excerpt:
Pingback| 2.25.10 @ 10:36PM
The Politics of Giving | Drakz Free Online Service links to this page. Here’s an excerpt:
louboutinvips|3.29.10 @ 4:36AM|#
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.
http://www.christianlouboutinvips.com
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