There is nothing wrong with philanthropy. Charities exist to advance the common good. While not all charities achieve their mission, many do, and many meet their annual goals. We donate to these …
There is nothing wrong with philanthropy. Charities exist to advance the common good. While not all charities achieve their mission, many do, and many meet their annual goals. We donate to these organizations because their work reflects our values and experiences. Our giving, paired with funding from other sources, like public and private grants, helps charities extend their reach and create employment opportunities in the communities they serve.
At the beginning of the 20th century, nonprofit employment was less than one percent of the total U.S. labor force. When the Tax Reform Act introduced the 501(c)3 status, nonprofit employment accelerated, but so did tax-deductible donations. The new law expanded fiscal choice for private citizens with disposable income and redirected potential revenue away from where it normally would have gone in years prior—the government. “Peace, love and rock n’ roll” wasn’t the only paradigm shift of the 1970s.
Not surprisingly, the U.S. federal budget deficit increased dramatically after the Tax Reform Act passed. Although only a fraction of all annual charitable giving could qualify as taxable income, this total remains remarkably similar to the average annual deficit since 1970.
Couldn’t the government just tax its wealthiest citizens to make up for the difference? Certainly, but the question should really be why fiscal conservatives and Republican deficit hawks would let this happen in the first place. Ronald Reagan wasn’t even president yet. Could we have balanced our federal budget if the government assumed all tax-deductible donations? Not quite, but almost.
To be perfectly clear, I’m not suggesting that’s a viable solution for reducing the deficit, or our national debt. I want to reemphasize that there’s nothing wrong with donating to charity. Then, I read about how many registered nonprofits exist in this country.
When privately-owned organizations substitute the role a government should perform in social services, arts & culture, science research, or infrastructure upkeep, I consider this a failure of government to provide a minimum sufficient level of care for its citizens.
Nonprofit organizations existed before the 1969 Tax Reform Act. Their tax-exempt status did not. Back then, there were 24 million Americans living in poverty. In 2019, there were 34 million Americans living in poverty. As our nation has grown, poverty continues to represent a smaller proportion of the population, but this doesn’t discount that the actual number of individuals living in poverty has increased. Nor does the aforementioned number account for the COVID-19 pandemic. Unfortunately, we also rely on outdated metrics. Our evaluation underrepresents the actual number of Americans living in poverty. Some nonprofits address poverty. Some nonprofits save the whales.
Philanthropy began a new chapter when crowdfunding websites, like Kickstarter or GoFundMe, granted anyone with an IP address and a credit card the opportunity to donate directly to private citizens. While donations to registered 501(c)3 nonprofits are tax-deductible, most crowdfunding companies are either public-benefit corporations or for-profit, and your donations are not tax-deductible.
It’s not my job to say where your money should or should not go. But isn’t that the point?
If we can’t provide a minimum sufficient level of care for our brothers and sisters, then we have no business allowing individuals the right to choose directly where their money goes. We choose our elected officials, who should have the knowledge and experience to make those decisions for us. We may not have great confidence in some of our officials right now, but this is no reason to justify individualism as the solution to satisfy and serve the common good. I hope this truth is self-evident.
When the U.S. shows consistent, meaningful progress toward its elimination of poverty, we will have earned back our philanthropic rights. Then, we can fund basic research, we can embrace the arts at the local level and we can rebuild our bridges—real or metaphorical. A fictional White House Communications Director once called government “a place where people can come together, and no one gets left behind.”
As long as you can afford to donate, you should support the causes you care about and the charities that address them. You should also hold your elected official accountable for those same causes. There’s nothing wrong with your philanthropy, but our government can and should be an instrument of good, too.
Noah Kaminsky is a middle school science teacher and a youth sports coach. He donates his time more than his money.