Obama worries charities: The Swamp
The Swamp
Chicago Tribune
Posted March 1, 2009 10:57 AM
The Swamp

by Frank James

Peter Orszag, the Obama Administration's Office of Management and Budget director, defends the White House proposal to reduce the tax savings the wealthy get from their itemized deductions, a proposed change charities fear would harm their donations.

Orszag, on his blog, says not to worry:

Will this hurt charities? The evidence suggests that many factors affect charitable contributions, including the desire to help the charity and overall economic conditions. (The most recent example with changing the tax code illustrates that point. Between 2002 and 2003, the top income tax deduction for charitable contributions was reduced from 38.6 percent to 35 percent - and yet individual charitable contributions rose, presumably because other factors were a more important influence on giving than the change in the income tax.) Furthermore, about 75 percent of overall contributions would not even be affected by the proposed income tax change - because the contributions come from individuals who would not be affected or from corporations or foundations not subject to the individual income tax. Finally, even to the extent that charitable contributions are affected by tax considerations, the budget contains other proposed changes (including retaining an estate tax) which will create stronger incentives for giving. Above all, though, the best way to boost charitable giving is to jumpstart the economy and raise incomes - and the purpose of the Recovery Act enacted earlier this month was to do precisely that.

Maybe Orszag is right and there would be little harm done by changing the law so the savings would be 28 cents on the dollar, not the current 35 cents, But what if he's wrong?

Non-profit institutions, especially colleges and universities, have seen staggering declines in their endowments in the last year. Many of their wealthiest donors have seen similar losses.

Industries like the financial-services sector, once a large source of funding non-profits, are in less of a position to make the kinds of contributions they once did.

All this is exerting tremendous pressure on giving. And because a financial and economic dynamic like the one we're currently experiencing hasn't happened in the post -Second World War period, there's a lot of uncertainty and fear.

So Orszag's reference to the effects of past tax-rate changes as a predictor of the effect Obama's proposal would have aren't necessarily predictive of what will happen in 2011 if the economy and financial markets are still relatively weak then, which is unfortunately possible.

The Chronicle of Philanthropy reported Friday that the Indiana University Center on Philanthropy sees a sizable negative impact from the proposal.

President Obama's tax proposals -- including a limit on charitable giving deductions that could be taken by America's wealthiest people -- could cause giving by America's wealthy to drop by several billion dollars a year, according to estimates released today by the Indiana University Center on Philanthropy.

The center looked at how the proposals Mr. Obama released on Thursday would have affected giving based on 2006 data showing how much taxpayers deducted for charitable contributions. It said that if Mr. Obama's tax plan had been in effect, Americans with incomes of $250,000 or more would have decreased their giving by 4.6 percent or nearly $3.9-billion. People at that income level claimed more than $81-billion in charitable gifts in 2006...

... In a statement, Patrick M. Rooney, interim director of the Indiana center, said he worried about the effect of the tax change at a time when the downturn in the economy has put a squeeze on many donors and the charities they support.

"Tax incentives do stimulate more giving," Mr. Rooney said, "and the challenges facing the nonprofit sector in 2009 suggest that this might be a good time to provide additional incentives, rather than reduce the value of the tax deduction for high-income households, so that the donors with the greatest capacity to give have more reasons to do so."

(Full disclosure: I'm a member of the trustee board at Dickinson College in Carlisle, Pa., the kind of non-profit institution that could be negatively affected by Obama's proposed tax-code changes.)

Given the concerns this proposal has raised in only a few days, it seems likely it will be one of the most fervently opposed of Obama's proposals.

Just the lobbying by universities and colleges alone is likely to be intense, let alone all the other non-profits who've already been thrust into a state of controlled panic by the economy's crash landing.

One of the ironies in all this is that the proposal comes from a president who once worked as a community organizer whose efforts were funded in part by the kind of philanthropy that could be harmed by the White House proposal.

Digg Delicious Facebook Fark Google Newsvine Reddit Yahoo

Comments

Just another variation on the tired Bush era refrain of "volunteerism".

"Volunteers" were all that was needed to solve all the domestic problems, according to them. No need for Govt. to get involved at all. Nothing to see, folks, just keep moving.

That always was one of their most dishonest ploys.

They were in power 15 years. Did you notice any increase in "volunteerism"?

No, except when Joan Kroc left a lot of $$$ to the Salvation Army.

People who are going to do good deeds privately are going to do them regardless.

All the stationmasters and conductors on the UGRR.

Civilians who sheltered refugees in WW II at the risk of their lives.

All this tax code mumbo jumbo is one more right wing scam.

Yes, rich will give millions to some museum of judaica or some Williamburg Colonia garden restoration or to preserve the Pullman Mansion if they get tax breaks.

People who are motivated altruistically will do their deeds regardless of any cheap-ass charitible deduction.


Perhaps Orszag doesn't care about donations to charity because it's well-known that Liberals like him don't GIVE to charity.

From Reason magazine: "...it turns out that conservatives and like-minded welfare skeptics more than hold their own when it comes to charity. So says Arthur C. Brooks in his new book Who Really Cares?: The Surprising Truth About Compassionate Conservatism. Brooks, a public policy professor at Syracuse University, sums up his own results thusly: Giving is dictated by "strong families, church attendance, earned income (as opposed to state-subsidized income), and the belief that individuals, not government, offer the best solution to social ills--all of these factors determine how likely one is to give."

Brooks shows that those who say they strongly oppose redistribution by government to remedy income inequality give over 10 times more to charity than those who strongly support government intervention, with a difference of $1,627 annually versus $140 to all causes. The average donation to educational causes among redistributionists was eight dollars per year, compared with $140 from their ideological opposites, and $96 annually to health care causes from free marketeers versus $11 from egalitarians.

A 2002 poll found that those who thought government "was spending too much money on welfare" were significantly more likely than those who wanted increased spending on welfare to give directions to someone on the street, return extra change to a cashier, or give food and/or money to a homeless person.

Brooks finds that households with a conservative at the helm gave an average of 30 percent more money to charity in 2000 than liberal households (a difference of $1,600 to $1,227). The difference isn't explained by income differential—in fact, liberal households make about 6 percent more per year. Poor, rich, and middle class conservatives all gave more than their liberal counterparts."


Why don't we lift up the middle and lower classes of this country with a liveable wage. People would rather do for themselves instead of taking assistance from others. Also, typically, there is not a more ineficient means of distributing money to the needy than to run it through a "charity". Churches are about the worst with this percentage, by the time you take off their salary, overhead, building, and maintenence costs, there is typically a small little peanut left to give to the needy.


At least we know one eager patriotic American taxpayer who will not be negatively affect, Joe Biden. What was the figure, something like a 2K in charitable contributions on income over 2M. Love those spendthrifts who play with anothers money.


Change You Can Believe In: I am asking you to post your links to your "quotes" from above. I found your Reason Magazine article and it is quite different than what you "quoted". You would not happen to be another faBruceaction posting here are you? It would not suprise me, as lying, deceit, and fabrication are the hallmarks of your party.

Important note for everyone to know about your comments: When critics reviewed Mr. Brooks numbers and subtracted the "charitable" giving to churches, the numbers for boths sets of demographics were about equal. To many non-believers, giving to church is as nutty as giving to the local UFO club.

http://www.reason.com/news/show/118525.html

http://en.wikipedia.org/wiki/Arthur_C._Brooks


The change in the tax rules just reduces the amount of the donation that the charity receives, it does not change the amount that the donor contributes. The new rules just give the government a bigger piece of the donation.


xcellentform, I beg to differ. The response to Hurricane Katrina is the penultimate example of the flaw in your theory. It was church charities who helped prevent a worse humanitarian crisis. Without them, there would have been far more casualties. Their response vs FEMA's? No contest. They were there immediately while FEMA was planning their horrendous strategy plan.

I believe that most want to do for themselves instead of taking assistance from others but as a taxpayer, I have more faith in the efficient use of my money by non-profits than I do by the federal government. Let me choose to give to well run non-profits, as opposed to the fed taking my money and wasting it. Food stamps, welfare, all of it... do your really think the filtration of my dollar down to that food stamp is more efficient than the result of what my local charity could do with that dollar? I'd say that food stamp ultimately cost 8 dollars just to get down to that one dollar for that crack mother.

In addition, human services aren't the only non-profits that will be effected. If we're going to improve our nation's competitive edge in education, charter schools (every example of school) even community colleges are better served by direct donations rather than what goes through Washington.


Katrina - cry of racism

Andrew- ethic of work

Just think of Dade County and the devastation of Hurricane Andrew. The work ethic, the never give up attitude helped rebuild.


Read the link listed above regarding charitable donations.

Conservatives give more than liberals is what the article said.



Study after study shows conservatives give to charities by a wide margin over liberals. This tax law is just another move by Obama and his Leftist cohorts to destroy this country and everything good in it that has made the U.S. the top country in the world for the past 100+ years.


So when a small business owner is thinking about investing a bit more time, effort, and risk to earn another $20K and support a charity, the federal government takes a few more of those dollars before the charity gets them. Yea, thats the new Obama plan.


When you think there are things that just wouldn't be polarized by the "parties" another policy is canned or corrupted in the new Socialist Party. I cannot give to charities or a begging person without Team Obama getting their hands on it? Maybe Pelosi needs to write her name on the dollar bills?


I think you all are missing something important here. It lies in the following paragraph from the text by Frank James:

"Non-profit institutions, especially colleges and universities, have seen staggering declines in their endowments in the last year. Many of their wealthiest donors have seen similar losses."

Notice why the non-profits are hurting? Because the wealthy aren't giving as much. Not the poor. Or the middle class. The evil, vile rich. The ones who need to be punished. The ones who should start, in the words of Bill Clinton, "paying their fair share." Turns out they were paying all along -- and fueling many of the institutions that make this country great while doing so. But don't worry. Just go on taking more of their money to use for your little Left wing pet projects to "make America better." I'm sure that they've got plenty more to give and continue to pay your salary. Right?


Um John: what small business is donating over 250k to a charity? See this is the problem, people like you spouting things without actually digesting the facts. It impacts only donors that donate greater than 250k, and in 2002 this was also done and the donations rose, even though one would think it would cause a decline.


Read the full article for pete's sake.


Scott, I stand by my statements. Do me a favor, go audit your churches annual statments and see what the total amount that went to charitable activities outside of the church and divide it by the total recievables. If that number is larger than 10% I would be shocked. When I give money directly to an organization or an individual, 100% of my money goes to help them. There is nothing more efficient then that.

JB,......still believing the pug lies. The rich are not doing well because no one is buying. Who buys from them? Typically it is the middle class. So when the middle class of this country gets back on its feet, then so will the rich. Your trickle down theories are last decades fads, and they were proven not to work. Where were you at?


If your motivation for giving is to get a tax break, you're really not all that altruistic, are you?

Put your money where your mouth is, holier-than-thou Republicants. Show the country that your largesse is indeed boundless, wholly unaffected by your selfish desire to avoid paying taxes.

I won't hold my breath. The GOP is and will always be the party of shameless greed.


from ornery: "They were in power 15 years. Did you notice any increase in "volunteerism"?" -

Who is they? Bush was in office for 8 years; Clinton: 8 years. House: 1949-1993 (D); 1995-2005 (R)


Xcellentform: "Why don't we lift up the middle and lower classes of this country with a liveable wage. People would rather do for themselves instead of taking assistance from others."
You speak like someone who has never owned a business. The current minimum wage, $7.25, is more than liveable for someone with no skills and no education. It's up to the individual to improve his or her employability to earn more money. It costs a lot of money to run a business. It's easy to spout off about how unfair the world is if you haven't experienced both sides of the story.


Xcellentform: "The rich are not doing well because no one is buying. Who buys from them? Typically it is the middle class."
Who employs the middle class, X? The government? Not likely. It's probably those evil rich people who run businesses and employ most of America.


a blinkin: "The GOP is and will always be the party of shameless greed."
Spoken like someone with a case of class envy.


Reagan/Bush I 1981-93.

Rep House & Senate, 1995-2007

Bush II 2001-2009.

The "they" boosters of "volunteerism".


a blinkin: "The GOP is and will always be the party of shameless greed."
Spoken like someone with a case of class envy.

Posted by: VibrioCocci | March 2, 2009 3:42 PM

Whatever makes you feel good about yourself is OK w/me VC. All I know is it's always the Republicants whose approach is me first, country second. What other set of principles could lead a party to start a war and at the same time insist on tax cuts for the top bracket? I'll go ahead and call that greed.

Leave me alone for now. I'magonnago grab a 40 a dream about how I can someday be as rich as you.


Blinky,
.
Perhaps a party that inherited a recession and an unresolved Islamic Terrorist issue?


VC, or should I just call you cocky?: I'm sure I've owned a business longer than you have fool. I've seen both sides of the coin. Your joke that minimum wage is more than enough for a living is only a twisted joke that you say I'm sure, as no one with common sense would say such a thing. I put a liveable wage at about $12/ hour....just for the record. I've never paid an employee less.

Your second part is also a joke right. Did your mummy teach you to answer a question with a question VC? I also know that there are far more middle class business owners than there are rich ones.

So, VC, when you reach a higher level of understanding, you will retract your filthy statements. It might be in your next lifetime, but you will eventually learn. I'm just glad they are all posted here for review.


I'm a small business owner, and, yes, I have donated 20K to charity in a year. I have also donated from my personal income. And, yes, I do consider how these contributions are being taxed! These days we don't make businesses decisions based on what is the best thing for our business, we make business decisions that will help us save taxes! That's because we are taxed from every direction, not just from the federal government. It's tough these days for a small business owner to make any kind of profit. Giving to charities is a way of avoiding tax while doing something good for people. But, I guess "avoiding taxes" is "unpatriotic" to some of you! I love this country, but I don't love how the federal government takes our money and wastes our money. If any of you liberals had to meet an employee payroll in these economic times, you might just acquire a different perpective. I probably will give a lot less to charity this year, not because that's what I want to do, but that's what I have to do to keep my business above water and keep giving paychecks to my employees! Reducing the tax break I get for charitable deductions is just another deterrent.


Xcellentform: If reaching a higher level of understanding means calling people fools, cocky, and by referring to individual answers as a joke and filthy statements, then I would rather not reach that level ... ever.

If you read my answer you would have seen that I did first ask a rhetorical question. Then I proceeded to answer it myself. Let me break it down for you:

QUESTION: Who employs the middle class, X? The government?
ANSWER: Not likely. It's probably those evil rich people who run businesses and employ most of America.

Take a minute or two to look it over, X.

You don't own a business, and you never have. If you did you would know that you can't assume every business owner will be able to afford your so-called liveable wage of $12/hr no matter what business he/she owns. Common business sense will tell you that. Instead, you probably make $12/hr and you're angry at the evil rich people for not paying you more money. Don't assume that because a person owns a business that he or she is rich. Again, you would know this basic concept IF you ever really owned a business.


For the one who posted "People who are motivated altruistically will do their deeds regardless of any cheap-ass charitible deduction"...you are living in denial. Personally, I contribute more than $50K per year to charities and will surely reduce that amount if such limitations are imposed. In the end, this hurts those who need it most. Again, it goes back to the individual making the choice to give their income to others, not a government who is unable to maintain their own shop making the choice for them...how about making sure those who owe taxes (like recent gov't officials) actually pay them.


Post a comment

(Anonymous comments will not be posted. Comments aren't posted immediately. They're screened for relevance to the topic, obscenity, spam and over-the-top personal attacks. We can't always get them up as soon as we'd like so please be patient. Thanks for visiting The Swamp.)

Please enter the letter "o" in the field below:

Barack Obama
Want to see more photos? Click here

Play "Budget Hero"

Play Budget Hero

Latest polls

News, but funnier

Cartoon

Walt Handelsman

Cartoon

The Lowe- Down

Cartoon

Joe Fournier

Cartoon

Editorial cartoons

Quizzes

Rahm Emanuel

Know the real Rahm?

McCain

Presidential trivia