The Federal Government is looking for money. I know, big surprise. Next target: remove the charitable gift deduction.
In a recent article in the Chronicle of Philanthropy, Jack Shakely shares that in this time of deficits, the deduction may be too costly to keep.
And he has a point.
- An individual giving a million dollar gift to a building project or a new national program – doesn’t need the tax deduction.
- Seventy percent of Americans don’t itemize and don’t get the benefit of a deduction anyway, even if they are (and they are) generous with their dollars to worthy organizations.
- The charitable deduction is not the top reason why most donors give.
- We are in a fiscal crisis and more in the coffers, even a little bit more, will help meet the country’s financial obligations.
So, why should we keep the charitable deduction? Because it is just one small way to reward people for doing the right thing
Yes like many people, I have been disheartened by the dialog going on in Washington. We seem to have lost our heart – at least our civility – when it comes to the public debate. The country is polarized and a major fight within Congress and between Executive and Legislative branches seems to be a daily news story. In some ways, we are not just polarized, but paralyzed – and doing the right thing seems to have become less important (my opinion).
I confess my wife and I get a charitable deduction as we have a mortgage, give a meaningful percentage of our income to charity and itemize. Is the charitable deduction a major reason for our giving – no. But, it helps. I would contend that I give more then I would otherwise, because Uncle Sam gives me a little back. But is that a reason to keep the deduction. Perhaps. Perhaps not.
I contend the reason to keep the charitable tax deduction is because it gives our government, governed by the people, just one way to say that giving is important.
You can say people will do it anyway, but believe me, less money would flow and fewer people would give – we know that. In a study conducted by Dunham + Company in January 2012, it concluded, “…that cutting, capping, or limiting the charitable tax deduction…would likely drop total donations by as much as $5 billion to $7 billion.” Why? Because after 23 years in the fundraising profession, I can tell you that any excuse to hold onto what you have – works. To give it away is difficult and any excuse will do.
However, on the other side, one small incentive to motivate a single act of kindness, an act of selflessness, an act that represents what we want our world to be – works too. With encouragement, our generous nature shines through.
I would offer that any incentive that spurs that single act is worth a fortune. It helps us focus on others rather than ourselves, lightens our heart, helps make the world a little better, and, in a small way, may even make a difference in someone else’s life.
If you saw the movie, “Pay It Forward,” you know what I am talking about. One act of giving can spur tens, hundreds, perhaps even thousands of generous acts that ripple from the one. Motivate an individual – motivate a community – motivate a country.
In short: it’s not about the money. It’s about the power that one gift can have. Reason enough.
Removing the charitable deduction is a bad idea. The country can’t “afford” it? I believe the country can’t “afford” to live without it.
You can follow David on Twitter at @Whitehead_Dave.
Photo credit by: 401K