Taps on Donor Intent? Budget Punishes Charitable Giving
Updated March 10, 2009
Is it fair to send the bill of people who don’t pay their mortgages to people who do? Many homeowners who saved their money, made a down payment and didn’t buy more house than they could afford resent that they may now be forced to subsidize mortgages for people who lied about their income, bought that third bathroom and drained their equity by treating their house like an ATM.
So how about charitable donations? Should we encourage citizens to contribute or slap them in the face for their generosity?
Campaigning for President, Barack Obama slathered praise on the vital work of charities, declaring "The fact is, the challenges we face today - from saving our planet to ending poverty - are simply too big for government to solve alone. We need all hands on deck."
President Obama’s $275 billion mortgage bailout taxes responsible people who pay their home mortgages to reward irresponsible people who don’t. And Americans are catching on. A recent Wall Street Journal /NBC Poll found people believe Obama’s mortgage bailout is unfair by 46%-36%.
But barely two weeks on the job, President Obama began extending the "bailout" rhetoric.
At first glance, one would think that the President is four-square behind non-profit giving. Repeating that charities must help America meet our challenges, he stated, "Over the past few days and weeks, there has been much talk about what our government’s role should be during this period of economic emergency. That is as it should be – because there is much that government can and must do to help people in need. But no matter how much money we invest or how sensibly we design our policies, the change that Americans are looking for will not come from government alone. There is a force for good greater than government. It is an expression of faith, this yearning to give back, this hungering for a purpose larger than our own, that reveals itself not simply in places of worship, but in senior centers and shelters, schools and hospitals, and any place an American decides."
But then came the body slam. Obama rolled out a budget plan which slashes tax deductions taxpayers can take for charitable giving.
Under Obama’s plan, taxpayers earning over $165,000 would see their charitable deductions cut by 20-percent, and those earning over $357,000 would have their deduction chopped 30-percent for every dollar they give away. Of course, with smaller deductions, people will give less. Indeed, a study for the National Bureau of Economic Research concludes Obama’s charity tax will reduce charitable giving by 10-20-percent.
According to the Center for Philanthropy, Obama’s charity tax will drain $3.87 billion from charities, compounding hits from the stock market’s losses.
Government control of charitable dollars
Why discourage charitable giving? One potential reason may be that if charities are forced to do less, politicians have an excuse to do more, making government bigger, and thereby enlarging their own power.
Now comes a new campaign from an Obama-linked group to gin up pressure on foundations to award funding based on race. In effect, the National Committee for Responsive Philanthropy (NCRP) is advocating racial quotas in grant making. In the NCRP report Criteria for Philanthropy at its Best, foundations are advised to provide at least 50-percent of their grant dollars to benefit lower-income communities, communities of color, and other disadvantaged groups.
The committee looked at 809 of the largest foundations in the country, whose combined three-year grants totaled almost $15 billion, and concluded that the majority of foundations are "eschewing the needs of the most vulnerable in our society" by neglecting "marginalized groups." (WSJ 3/3/09)
While some foundations might be interested in medical research, disaster relief or helping alcoholics, the NCRP believes at least 25-percent of all grant dollars should be used for "advocacy, organizing and civic engagement to promote equity, opportunity and justice in our society."
To enforce the vision of the NCRP, donor intent must go out the window. In fact, the organization calls for foundation boards to exercise "collective or social preferences" in decision-making, rather than donor intent.
The Obama connection
While some people might think the NCRP is just blowing smoke, a closer look shows that close ties with the Obama Administration are giving them clout. For example, the NCRP's list of partners & members includes the Center for Community Change which led a conference in Washington, DC recently in which more than 2,500 community leaders and organizers - including top Obama transition leaders - came together to further their agenda on community, faith and democracy.
Other Obama linked groups of note are George Soros’ Open Society Institute and ACORN. Soros is a major funder of left-leaning political efforts while ACORN, which endorsed Obama, was accused of a number of misdeeds involving voter registration fraud during the 2008 elections.
Center for Community Change director David Jones gushes that "President Obama understands that our problems are rooted in the choices made in the past. New choices – wiser choices – must be the hallmark of his administration." He believes that Obama's tax policies must be "more progressive."
But to impose mandates on how private foundations must spend their charitable dollars? Since Obama is following the NCRP economic agenda with his own budget recommendations on the issue, it's not a far leap to worry that government might jump into foundations controls.
Responsibility Under Attack
In the new economy, responsible people will subsidize mortgages for irresponsible people - or their lending institutions. And they’ll be penalized if they give to charity, if they choose to give at all.
Clearly, reducing deductions on charitable contributions will have the effect of driving down income to non-profit organizations. Additionally, donors who support non-profit foundations which are involved for ideological purposes that may not follow those of the President - and those who run these organizations - have ample reason to be concerned that donor intent may be squashed by government-imposed mandates.
The work of non-profit organizations across the ideological spectrum has become both integral and necessary to citizens and the lawmakers who represent them. What will happen if these groups are forced to discontinue their work in bringing analysis and ideas to the American political landscape, providing transparency to the process, and all of the other services that privately-funded non-profit organizations provide? Will they end up going the way of America's mainstream media?
This can't be what Obama wants when he talks about freedom.
