Charities can be the nation’s conscience
Among the many proposals to raise taxes and cut and reallocate government spending to regain our country’s economic health, one of the most sensitive is decreasing the tax deductibility of charitable contributions.
The independent Congressional Budget Office recently reviewed 11 options for revising the income tax treatment of charitable giving, and it grouped them into four categories. All establish a floor below which contributions would not be deductible. One proposal retained tax deductibility only for donations exceeding $1,000 per couple or, alternatively, 2% of a person’s adjusted gross income. Under this example, the report estimated that individuals who itemize deductions would pay $15.7 billion in additional taxes yearly to the government. But charitable agencies could experience a loss of up to $3 billion (1.5% of the more than $200 billion now given annually by individuals).
That loss should be accepted by charities as the cost of leadership needed by the country now.
Contributing is a basic way we feel linked to one another. Reducing how much and how many people give to worthy causes will cut important help provided by human service, health, educational and cultural organizations. Yet, if the charitable sector publicly accepted a tax change and the potentially lower donations that would result, this action would provide desperately needed leadership to help move the country toward fiscal recovery.
We do not have an economic recovery plan that the country can rally behind because politicians and the public repeatedly assert, “Don’t cut my group” and “Don’t tax my group.” But we face “a looming crisis,” according to the bipartisan National Commission on Fiscal Responsibility and Reform. The commission further warns that, unless special interests stop lobbying to “exempt themselves from shared sacrifice,” our economy could shrink by 2% in 10 years. We need 3% growth just to begin to increase jobs.
If the nation’s 800,000 public charities that file returns with the Internal Revenue Service speak out and say that they will accept the proposed tax treatment change for contributions, they would exercise their role as the public’s conscience. They would force a good part of the private sector to look into the mirror and ask whether certain changes and compromise may be best for their own, their children’s and the nation’s future.
The charities’ public calls also would embarrass and provoke the leaders of manufacturers, corporations, banks, hedge funds, associations concerned about Social Security and Medicare, and the rest of the endless list of special-interest groups to accept government spending cuts and tax increases proposed for their own areas, as proof of their genuine interest in jump-starting the economic recovery.
The general public looks to the nonprofit sector to be the conscience of our nation. That is why individuals and institutions yearly donate $260 billion, and 65 million Americans volunteer their time.
I was a nonprofit leader for three decades and am now a university professor teaching about social change. Institutions and individuals always resist giving up benefits, and too many elected officials just go along with that. But people will change and support good-citizen actions if an aroused public spotlight is shined on them and they’re forced to look in the mirror.
Charities can hold up this mirror. But the clock is ticking.
I am a beneficiary of Social Security and Medicare and accept the need to reduce benefits or pay a greater cost. The choice — for my children and grandson — is clear.
Allan Luks, the former director of Big Brothers Big Sisters of New York City, is director of the Fordham Center for Nonprofit Leaders and a visiting professor at Fordham University’s Graduate School of Social Service. He is the author of four books, among them “The Healing Power of Doing Good.” The views expressed here are his own.
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