Charitable Giving: Is the Public Benefit Worth the Loss in Tax Revenue?
There is an interesting article in the New York Times, entitled “Big Gifts, Tax Breaks, and a Debate on Charity”.
In the United States, the wealthy are giving an unprecedented amount of money to charities, both while alive and in their Wills.
While the charities undoubtedly benefit, so too do the givers or their estates through allowable tax deductions. The NYT estimates that for every three dollars which is donated to charity, the federal government gives up at least a dollar in tax revenue.
Some argue that the public benefits more by these charitable gifts than they would if the money went to taxes. That is, charitable institutions spend money more wisely than the government would.
However, not everyone feels this way. To some, the benefits reaped by charitable giving are not commensurate with the tax deductions that the donors receive. Part of this is because what qualifies for a tax deduction is so broad – and encompasses everything from the Salvation Army to a group established after Hurricane Katrina to help practitioners of sadomasochism obtain gear they lost in the storm. The NYT estimates that less than 10% of donations go to organizations addressing basic human needs, like shelter or food and, amongst the super wealthy, the % is even lower.
The billionaire investor William H. Gross doesn’t believe the wealthy help society more than the government can, stating that “when millions of people are dying of AIDS and malaria in Africa, it is hard to justify the umpteenth society gala held for the benefit of a performing arts centre or an art museum…a $30 million gift to a concert hall is not philanthropy, it is a Napoleonic coronation.”
Have a great weekend!
Megan Connolly
