Wade Rathke: Chief Organizer Blog » charity

End Charitable Deductions

dine — Sat, 04 Dec 2010 16:29:14 +0000

New Orleans Thinking about it, there’s really not much of a consistent, coherent, politically progressive position that can defend the continued existence of the charitable tax deduction for donors, both citizen and rich. I think we should all do our part to support the government and, hey, even take a shot at the debt, and argue for an end of all charitable deductions. Period!

First, it’s a lot of money. According to an article in the Times this week quoting the Congressional Joint Committee on Taxation, the U.S. government loses “roughly $237 billon to the deduction” over an estimated four year period from 2009-2013. With 14 trillion in debt I admit that this is a small drop in the big bucket, but having run non-profits all my life, I’m glad to do my part.

Second, the rich don’t need it and haven’t earned it. The advantage of the tax giveaways squandered on the rich have even left people like Warren Buffet, Bill Gates the Elder, and others publicly admitting that they pay too little taxes. Given the tax breaks already offered, the last thing we need to do is giveaway more tax advantages. Today’s paper makes the case loudly. Bill Gates the Younger was all over the front page because he’s dropped millions into his current priorities around educational reform focused on teacher evaluation (not training from what it seems) and union seniority rule bashing, so hard strapped school districts that have to lay off teachers can also contend with Gates the Younger whose first time in a public school may have been long after he made his first billion. That was page one. Page four returned to Warren Buffet who was $50 million “lighter” as he happily said having helped fund a nuclear warehouse with various governments. All of which in both cases is fine, but in both cases they could have afforded such philanthropy even without the deductions, and in my view government arguably could have done the “right” things with their tax dollars, and they could have organized for the change like the rest of us biscuit cookers by convincing other citizens to join with us and make change, rather than using their change to force governments to bite at their bit.

Third, poorer people give more of their income away than the richer folks and largely without the benefit of any deductions on the short form, so why bother since the giveaway hasn’t “worked” anyway. In short people who want to give will give. People, who only give for the deduction, should let the government “give” where there is at least the hope and promise of accountability for the gift, which doesn’t exist for the rich at all. The perversion of money in politics is an excellent example of how willing the rich are to spend for what they believe in, regardless of the tax consequences. They already have an outsized voice, why offer a deduction to give them a larger sounding board than other citizens? No reason that I can imagine.

Fourth, democratic government at its worst in the United States is better at setting priorities for all the people than rich individuals at their best. There simply is no conceivable argument that I can imagine to favor elitism of the few with the wisdom and benefits of the many.

Finally for progressives, let’s get self-interested and come to grips with the fact that “they” get way, way more benefits than we do. Their foundations are more numerous and they are just way more conservative. Progressive foundations and donors can still be counted virtually on your hands and feet, while theirs are frankly legion. If deductions mean anything, then by getting rid of deductions we might be striking a huge blow for the progressive cause just by dumping the deduction.

Sounds like a good name of the campaign: Dump the Deduction.

Whatever? My vote: get rid of the charitable deductions. Period.

For the Rich Results are Bah Humbug

dine — Sat, 27 Nov 2010 21:28:45 +0000

New Orleans I was fascinated by an article in today’s Times about something called Charity Navigator, which would like to influence the way donors give by herding them into a “financial” or “strictly business” evaluation process. The piece was about their attempt to retool “…to add evaluations of a nonprofit’s accountability and transparency to its ratings, as well as research on its impact….” Wow, even adding some sense of “impact,” how revolutionary is that?

Turns out donors don’t much care for the ratings and really don’t care much for anyone’s ideas about how they should spend their money except themselves. What is most amazing is that this golden nugget is being presented as news. Unbelievable! To think that the rich mainly donate to and with people they know and based on what they think they already know, would seem to simply confirm what everyone everywhere already knew about the rich, including folks who direct nonprofits.

A survey was cited by Hope Consulting that only 35% of donors research their gifts prior to making it and only about 10% use ratings services of any kind as a primary source of information. Not trusting the reporter, I went to the survey and its recommendations to see what else these Hope folks might have learned.

The survey by the Hope folks was directed towards an outcome of pushing donors towards different behavior in their making their contributions and trying to understand how the pool of donors might be expanded and made more effective. Reading the executive summary, it was clear that the Hope folks were disconcerted at the results and trying to shine a dirty penny.

Nonetheless some of it was interesting:

Donors want small ball ($25000 or less) and would like it packaged as an investment as well as a gift.
Donors “discover and transact through advisors,” i.e. people they know and trust (certainly not ratings tools and surveys)
Donors are loyalty to the nonprofits where they contribute, and once in they stay in and increase contributions, i.e. if you make a friend, keep ‘em!
Donors say they care about performance, but that is not what drives their contributions, furthermore they evaluate performance based on information they received from the nonprofit to whom they donated, i.e. it’s a perfect circle with the rich, if you can break into the circle.

All that sounds right to anyone who has ever had to raise money and lots of it to keep the trains moving. The notion that a “business model” and more “market efficiency” could be overlaid on donors, especially the really rich seems absurd, since it so clearly confronts the very sense of arrogance and entitlement that becomes part of the “noblesse” way before the “oblige.”

The sense of disappointment as theory crashed into facts was especially palpable in one area. The survey found that bigger and richer donors are not that different than small donors in the way they make decisions about gifts, which surprised some because they wanted to believe in the bias that the richer you were, the smarter you were, therefore the more likely you would be to make decisions about philanthropy in a more “business-like” manner. Poppycock, it seems. I would love to really meet someone who was surprised at this. Where do they live? Who do they know? What is their country?

A better clue to these ironies than the Hope consultants produced or the philanthropic reporter was found in an ironic castaway comment by the Times columnist Bob Herbert in his column about the “Class War” (his words) and the mounting divide between rich and poor now being exacerbated in this Great Recession. As a key example of “rich-think,” he cited the obvious paradox in the appointment by billionaire Mayor Bloomberg of the millionaire CEO Cathleen Black to run the NYC schools. After citing the different world of Black and the private school background of her children and the $4 million 2^nd home, he says: “So here we have the billionaire and the millionaire telling the poor and the struggling – the little people – that they will just have to make do with less. You can almost feel the bitterness rising.”

Whatever the world is coming to, as at least Bob Herbert and most of the rest of us realize, it is not moving to a system where the rich are moved anywhere by ratings about anything, especially their alms to the poor and nonprofits, if they give any at all.

Poor Give More

jstuart — Mon, 25 May 2009 15:03:59 +0000

Ocean Springs The poor are more generous that the rich, and in fact the poorer you are, the more likely a larger portion of your income is given to others. For the poor experience drives empathy and action. For the rich it turns out that talk is in fact cheap.

Quoting from Frank Greve of the McClatchy chain in an article recently entitled, “America’s Poor are its Most Generous Givers,”

“The lowest-income fifth (of the population) always give at more than their capacity,” said Virginia Hodgkinson, former vice president for research at Independent Sector, a Washington-based association of major nonprofit agencies. “The next two-fifths give at capacity, and those above that are capable of giving two or three times more than they give.”

That’s an elegantly generous way of putting it, I guess? Greve also quotes the brutal facts from the BLS indicating that the poorest of our citizens are in fact twice as generous as the top strata of the rich.

“Indeed, the U.S. Bureau of Labor Statistics’ latest survey of consumer expenditure found that the poorest fifth of America’s households contributed an average of 4.3 percent of their incomes to charitable organizations in 2007. The richest fifth gave at less than half that rate, 2.1 percent.”

In all likelihood this doesn’t come near to counting remittances sent home by migrant workers and immigrant families to their families and relatives in their home country which adds up to billions more per year.

It seems the only way in which the rich outstrip the poor is in public relations. Even though fewer are giving and they are giving the least, buildings are named after them, banquets held in their honor, plaques engraves, and gushing thank you notes sent. Furthermore, they lobby for more tax deductions so that their generosity (when given) also returns more benefits to them. Some are still obnoxiously quoted on those issues as saying they know better than the government and others how to express their charity.

Meanwhile even with their last dollar, poor extend a helping hand for their brothers and sisters. In collecting membership dues to support building organizations among the poor in American and around the world, outsiders and donors are often skeptical when they learn that the poor still make it a priority to support their own organizations.

Just more evidence that we should not be surprised.