Both Oars In Why We Give!

Mar 6, 2009

I have admit that I was loaded for bear when I first heard the news that President Obama’s proposed budget plan called for changes in how charitable deductions are handled.  I headed a non-profit for nearly a dozen years and have been a deacon in the Church for eight—both organizations are able to survive and serve thanks to charitable support. It is only natural that House Republican leader John Boehner’s warning that the new measure would deliver a “sharp blow to charities at a time when they are hurting during the economic downturn” struck a chord with me. I saw red knowing many non-profits were already deep in the red themselves.

But, I took a closer look and had a much more Shakespearian reaction: much ado about nothing.  Since the change impacts only donors who itemize and jointly earn over $250,000 or individually over $200,000, it affects only a small percentage of donors—maybe as little as 3%. According to several accounting firms, donors in the highest tax bracket would see their deduction for donating $1,000 drop from $396 to $280 if the plan is adopted as stated. If you had a thousand dollars to give to a deserving cause, would you hold back on account of $116 less in deductions?

Experts say “No, or at least, not likely.” Bloomberg writer Ryan J. Donmoyer in her March 4th article, Rich Donors May Be Undeterred by Tax Caps on Charitable Gifts, reports that tax savings ranks low on the list of why we give.  A Bank of America survey reported by the Wall Street Journal on the same day found that only 10% of givers would dramatically decrease their giving in response to deductions going to zero. Mr. Obama’s proposed change is minor in comparison to eliminating the charitable deduction all together.  Fortunately, tax breaks prove to be the perk, not the reason we give.

I agree. It is my experience that people give out of love, a sense of civic responsibility and a desire to help others, not primarily to avoid taxes. Pastors, educators, environmentalists, and civic leaders inspire giving, not tax codes.  Even a crashing economy can’t stop brotherly love. Giving USA reported that giving broke $300 billion in 2008 to set a new high—enough to bailout a couple of banks and a “too big to fail” insurance company. 

I have raised money in churches, parking lots, board rooms and living rooms. I have taken pennies (freely offered) from children. I have even taken a sixth grader’s lunch money.  This generous young boy responded to my hypothetical statement that we could run our school in Haiti for a day on just what the class had in their pockets. He walked up after class and emptied the entire contents of his pocket into my hand and said, “Here’s what’s in my pocket.” He didn’t ask for a tax receipt.  I don’t think this fellow or the industrial leader who chipped in $50,000 for the cause will rethink his giving based on this change.

I also think we give because we generally agree with the principle that much is required of the person who is entrusted with much. And, we should. It is our duty to help others who are in need. And, if we have a lot, help a lot. In Centesimus Annus, his masterpiece on social order celebrating the hundredth anniversary of Rerum Novarum, Pope John Paul II wrote, “It is a strict duty of justice and truth not to allow fundamental human needs to remain unsatisfied and not to allow those burdened by such needs to perish.” Sensible, clear words—certainly they are more inspirational and understandable than the tax code.

Forced redistribution of wealth is neither ultimately beneficial to a society’s economic health, nor in-line with our human dignity and private property rights.  However, our federal income tax, given the plethora of deductions and the relatively low rates, hardly qualifies as that.  This time I am with the President. Afterall, that extra $116 is going to charity—it is helping our Uncle pay his debt, rebuild his house and provide health care for his children. That’s why we give and essentially why we pay taxes, too.