Policy
Plans to Soak the Rich Threaten Nonprofits
Mon Jul 20 2009
by Jeff McLinden
As Congress and the Obama administration prepare to push their plans for healthcare reform -- at the expense of the 2% of the population that earns over $300,000 annually -- a few other interesting details have begun to emerge...
Not content to simply raise taxes on this group to dramatic new highs, it seems the President also has plans about reducing a number of the tax breaks that are enjoyed by the wealthy -- the same breaks that every other tax-payer enjoys. I'm talking about those deductions for mortgage interest paid and, especially, those for charitable contributions. Has it occurred to Mr. Obama that while charitable giving isn't motivated entirely by the tax benefits such gifts bring, it does help to make giving more appealing to those who have the wealth to give large gifts and may otherwise not be as inclined?
Can this do anything but harm the non-profits that count on major gifts as a substantial percentage of their annual operating budgets?
For those who think the damage would be minimal, consider that the majority of most nonprofit budgets -- often as much as 70 - 80% or more -- is derived from the five to ten percent of their donor files that give large gifts. Any disincentive to those few who typically give gifts of tens or hundreds of thousands of dollars will certainly not HELP the prospects of non-profits to reach their budgets and accomplish their program objectives.
But this isn't about budgets... Rather it's about what those budgets are designed to accomplish. Think in terms of fewer hungry people being fed. Fewer children being taught. Fewer whales being saved. Fewer whatever! Ultimately it's the cause that suffers when people reduce or cease their charitable giving.
While it's true that other nations do not provide the same tax benefits for charitable contributions that we have enjoyed in the United States, it is also true that such nations (see Canada or England) cannot claim anywhere near the robust health enjoyed by the United States' nonprofit sector. American giving far surpasses that of any nation in the world -- and much of it is fueled by people of means who give substantial sums every year.
I am not suggesting that all giving will cease among the wealthiest few who might be burdened with these intended changes to the tax code. But I am suggesting that, if enacted, the proposed changes designed to "soak the rich" in order to pay for non-taxpayers' health benefits will certainly cause many to swallow hard when they consider the next proposal from their favorite charity to "make a substantial investment that can impact (you fill in the blank) in a tremendous way..."
As Congress and the Obama administration prepare to push their plans for healthcare reform -- at the expense of the 2% of the population that earns over $300,000 annually -- a few other interesting details have begun to emerge...
Not content to simply raise taxes on this group to dramatic new highs, it seems the President also has plans about reducing a number of the tax breaks that are enjoyed by the wealthy -- the same breaks that every other tax-payer enjoys. I'm talking about those deductions for mortgage interest paid and, especially, those for charitable contributions. Has it occurred to Mr. Obama that while charitable giving isn't motivated entirely by the tax benefits such gifts bring, it does help to make giving more appealing to those who have the wealth to give large gifts and may otherwise not be as inclined?
Can this do anything but harm the non-profits that count on major gifts as a substantial percentage of their annual operating budgets?
For those who think the damage would be minimal, consider that the majority of most nonprofit budgets -- often as much as 70 - 80% or more -- is derived from the five to ten percent of their donor files that give large gifts. Any disincentive to those few who typically give gifts of tens or hundreds of thousands of dollars will certainly not HELP the prospects of non-profits to reach their budgets and accomplish their program objectives.
But this isn't about budgets... Rather it's about what those budgets are designed to accomplish. Think in terms of fewer hungry people being fed. Fewer children being taught. Fewer whales being saved. Fewer whatever! Ultimately it's the cause that suffers when people reduce or cease their charitable giving.
While it's true that other nations do not provide the same tax benefits for charitable contributions that we have enjoyed in the United States, it is also true that such nations (see Canada or England) cannot claim anywhere near the robust health enjoyed by the United States' nonprofit sector. American giving far surpasses that of any nation in the world -- and much of it is fueled by people of means who give substantial sums every year.
I am not suggesting that all giving will cease among the wealthiest few who might be burdened with these intended changes to the tax code. But I am suggesting that, if enacted, the proposed changes designed to "soak the rich" in order to pay for non-taxpayers' health benefits will certainly cause many to swallow hard when they consider the next proposal from their favorite charity to "make a substantial investment that can impact (you fill in the blank) in a tremendous way..."
0 Comments