Saturday, November 17, 2012
New York Times: Charity’s Role in America, and Its Limits:
The outpouring of support highlights how central a role charity plays in our social contract — we Americans view ourselves as generous, yet we mistrust the government to help those in need. Our trust in charity is uniquely American. We pay less tax as a share of our income than citizens of virtually every other rich economy in the world. But we contribute more to charity than citizens of any other country.
When Democrats attacked the Republican presidential candidate Mitt Romney for paying only 13% of his income in taxes last year, his allies pointed out that the Romneys had given nearly 30% of their income to charity.
Support for charity has a partisan bias. Republicans much prefer charity to taxes. Democrats are more tolerant of bigger government. Still, 95% of all Americans say they donate to a church or other charitable institution....
Philanthropy ... seems more important than ever. Looming cuts to federal programs and shrinking state budgets mean that charity will have a bigger void to fill. But one of the things that induces people to give to these causes is a break on their taxes. It is legitimate to ask whether a government pressed for money should be forgoing $40 billion a year in tax breaks mostly pocketed by the rich for their charitable donations.
Should the government raise more money by cutting the charitable tax deduction for the wealthiest Americans, as President Obama has proposed, even if philanthropy itself took a hit from reduced contributions? Or should we stand by the Republican Party platform, which says that because of charities’ vital role “fostering benevolence and patriotism,” their tax preferences should not be touched?...
The nation’s philanthropists tend to prefer charity to taxes because they get to decide which cause is worthy. The flip side is that philanthropy is pretty much unaccountable to society. Unfettered by democratic controls and dictated by the preferences of donors, it doesn’t have a great track record of devoting itself to our most pressing social needs.
Religious organizations receive about one-third of the nation’s total charitable contributions, not including donations to religious hospitals, schools and social charities. Donations to human services charities, by contrast, which work to ease poverty, feed the hungry and the like, amount to less than 12% percent of the total. ...
In fact, a small portion of philanthropic efforts are aimed at helping those who most need it. A study by Rob Reich, an associate professor of political science at Stanford University, concluded that only a small share of charity redistributes income from the wealthy to the poor. A big chunk of the $40 billion donated last year to educational nonprofits went for new buildings and new programs at someone’s alma mater. Donations to schools in affluent school zones tend to help their own children, not those on the other side of the tracks.
As the government grapples with how to address the nation’s deficits over coming decades, Americans have an opportunity to reassess the role of philanthropy in addressing the nation’s problems. Should we continue to provide lavish tax breaks? Should we demand that in return for preferential tax treatment, programs target more clearly the needs of the poor?
Many Americans might think that keeping tax breaks for donations to build, say, a new university football stadium when so many poor students can barely afford college, is not the best way to spend scarce resources.
(Hat Tip: Ann Murphy.)