As we have been covering this debate over the past week, we have primarily heard from advocates within the nonprofit sector who are opposed to any change in current tax law concerning charitable deductions. However, who we have not heard as much from are those who stand in contrast to this position, or who ask more fundamental questions about where some of the larger tax-subsidized donations go.
So enter Pablo Eisenberg, a Senior Fellow at Georgetown Public Policy Institute and former Executive Director of the Center for Community Change. As a regular contributor the the Chronicle of Philanthropy, he offers a slightly contrary analysis, mildly in favor of the initial proposal to provide more fairness in the tax code. But more importantly he questions if those charity leaders raising only an alarm at the proposal are not really protecting their self-interests and not those of the poor
most charities are expected to benefit.
While his COP article “Fury Over Charitable-Deduction Proposal Reveals Nonprofits’ Self-Interest” can be found online, its worth noting that the editors decided to stick it behind their subscription pay-wall. So if you are not a subscriber to the Chronicle of Philanthropy, we have outlined three primary excerpts below.
In reacting to the “alarmist” viewpoints offered by some nonprofits and their leaders, Eisenberg counters:
“…. in their projection of a philanthropic Armageddon, these nonprofits seem to be ignoring several key considerations, including the inequity of the current tax system. They also fail to acknowledge the relatively minimal effect the change would have on charitable giving and the tiny portion of giving by large donors that goes to small, local organizations and charities that serve the needy.
Most disturbing is the hypocrisy of the nonprofit position. Instead of putting the national interest and common good first, those groups are pursuing their narrow self-interest.”
“…Groups that are small or local and serve poor people or minorities are not likely to suffer much from whatever decreases occur as a result of a relatively small drop in charitable giving. Neither are advocacy or grass-roots groups.
Surveys by Indiana University’s Center on Philanthropy, The Chronicle of Philanthropy, and other organizations have found that very wealthy donors give little to antipoverty, local, and social-service groups, directing almost all their large donations instead to universities and colleges, hospitals and medical schools, and museums and other cultural institutions…”
“…It is hard to imagine that the welfare of a few large charities is more important than dealing with America’s grave problems.
If the large, wealthy nonprofits and their associations would really like to see an increase in charitable giving, they should get out into the streets and the halls of Congress to push for the estate tax to be kept in place and for an increase in the capital-gains tax. Those taxes are a key incentive to wealthy donors to give big shares of their fortunes to charities…”
Earlier posts in this series:
- The Charitable Deduction: How Essential Is it?
- The Sides Are Clear, But Are We Prioritizing Giving Incentives Correctly?
- Will Basic Human Needs Charities Compete With the Arts?
- Are We On The Verge Of A Disruptive “Tsunami?”