Generosity and tax code

At first this topic may seem way off base for this blog, but it fits in light of my service with a nonprofit for more than six years now, and my toying with the idea of founding one in the Scissortail Art Center — even if that’s eight years off. So here goes.

Yesterday morning’s Excellence in Giving newsletter featured a recent New York Times article, Nonprofits Fear Losing Tax Benefit. A couple of quotes caught my attention, including the following.

“It’s disappointing that the charitable sector, which is broadly committed to improving the well-being of civil society, is in this case indifferent to repairing what’s wrong in the country at the expense of protecting its marginal tax advantage,” said Rob Reich, an associate professor of political science at Stanford University.

In my opinion Reich is off base. Maybe I’m missing something here, happy to be somewhat ignorant of the inane American tax system (Can a person actually be what is considered knowledgeable in this?), but the marginal tax advantage for nonprofits is less important than the tax deductions for people who give to 501(c)(3)s. According to the Times article, there are three schools of thought when it comes to deductions for charitable giving. One suggests donors are not influenced by the opportunity to itemize, to catch a break on their taxes. My own experience begs to differ. Donors do pay attention to this. Numerous people I’ve talked to about giving to M-DAT start their line of questioning with “Is it tax deductible?” If donors will no longer be able itemize, they will probably be less eager to give — at least in the short term.

Donors have, in essence, been conditioned to expect this special treatment, just like nonprofits. If the tax system drops deductions for charitable giving, I can imagine a number of very hard years for nonprofits. Following those few difficult seasons, however, I can also imagine those lost donations beginning to filter in again as people become used to the idea that the government does not — indeed, should not — bear influence on their generosity.

In light of my own past, present and potential future involvement with nonprofits, it may surprise some when I say that I’m all about significantly simplifying the American tax code. That includes doing away with deductions. I can imagine how the government’s original intent with this part of the tax law might have been noble, attempting to encourage donations to charitable organizations. Unfortunately, people’s motives have been negatively influenced by the law.

People should give out of their generosity; they shouldn’t be writing checks with hopes — even in the back of their mind — of lower taxes (even though lower taxes in and of themselves are also a good thing). People should give to a cause for the sake of the cause.

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About pcNielsen
Paul Nielsen founded The Aesthetic Elevator late in 2005. He owns a piece of paper, located somewhere in his house (not on the wall), stating that he earned a B.F.A. from the University of Nebraska around about 2001. While there, he studied studied architecture, graphic design and ceramics, graduating with a degree in studio art. Paul presently serves as communications manager for a small non-profit doing their print design and marketing. He spends as much time sculpting in his studio as possible — which is not nearly enough. Visit his website at pcNielsen.com.

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