TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, October 31, 2011

The Solyndra-ization of Philanthropy

Wall Street Journal op-ed, The Solyndra-ization of Philanthropy: The White House Wants to Steer Your Charitable Giving to Pet Causes, by Howard Husock (Manhattan Institute):

There can be no doubt now that the Obama White House believes that one important way to improve the economy is for Americans to give less to charity. In the collection of proposals he calls his jobs bill, the president has—for the fourth time in his administration—proposed to limit the value of the charitable tax deduction, cutting it back for those earning more than $250,000 to just 28% of a donation, from 35%. Although Senate Majority Leader Harry Reid dropped that proposal from the Senate version of the jobs bill, it remains in the White House set of recommendations to the deficit-cutting congressional "super committee."

By raising the cost of giving (by $70 for each $1,000 donated), the proposal, if enacted, would almost surely lead to a significant decline in overall charitable giving. ...

A drop in prospective donations is bad enough. Much more worrisome are the assumptions of the latest tax proposal and a White House initiative called the Social Innovation Fund. While the former assumes that the money diverted from charity can be put to better use by government, the latter adds the notion that government funds should themselves be directed to nonprofits, some previously independent of government. The other assumption is that private philanthropy should follow along, matching government dollars.

In combination, this amounts to what can be called the Solyndra-ization of philanthropy, in which the government would brand select social-service organizations with the Washington seal of approval, and thus signal that private charitable capital should be directed to the same organizations.

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The issue is that (some in) government now views charity as a rival. Charities provide services the government provides or would like to provide. By making it more difficult to raise money and, at the same time, increasing the regulatory supervision of charitable work, government hopes to decrease charity's influence while increasing government's influence over society. For decades, one of the things distinguishing American society from its European counterparts is the greater amount of charitable work done by private organizations in America. For government, this is a bug, not a feature.

Posted by: David Walser | Oct 31, 2011 8:33:26 AM

Wow, this goes beyond typical cronyism, which was just favoritism in legislation and government funding to "friends" of the administration. No, this is, in my opinion, the first step to devote all of the economy towards those actors in the economy the President agrees should be funded.

I don't even think "Socialism" encapsulates how bad this is.

Posted by: ScottM | Nov 1, 2011 4:39:37 AM

Private charities might fund things that our gov masters dont want, best to do away with it.

Posted by: richard40 | Nov 2, 2011 3:25:42 PM