By James Shott
For those of the Christian faith, Christmas is the raison d'être for their religion, the fulfilling of God’s promise to send His Son to Earth more than 2,000 years ago. Christmas now is celebrated around the world by both Christians and non-Christians through the tradition of gift-giving. In America, we not only exchange gifts, but also freely give of our time and money to help those less fortunate or who are in trouble during this time of the year.
In every community there are organizations that provide tangible benefits to the public and help others in need through volunteering for service projects and monetary and other contributions. Civic clubs and religious organizations raise and give thousands of dollars in assistance every year for medical care, food pantries, weatherization and home heating in the winter, building and repairing homes for less fortunate people and families, student tutoring and scholarships, animal welfare and spay/neuter programs, arts and cultural programs, assisting disabled persons, assisting police and fire fighters to purchase needed equipment, among other forms of aid.
Americans are regarded as the most generous people in the world. We give unselfishly to religious and civic organizations that support our charitable interests to help people both at home and across the globe.
In 2010 Americans donated more than $290 billion to their favorite causes, and four out of every five dollars donated came from individuals and bequests. The breakdown of charitable giving is: individuals, $211.8 billion; foundations, $41 billion; bequests, $22.8 billion; and corporations, $15.3 billion.
Americans donated $23.7 billion in corporate stock; $7.6 billion in clothing, and land valued at $4 billion. Leading the list of recipients of this generosity by a wide margin were churches and religious organizations at $100.6 billion, followed by educational entities, $41.7 billion; foundations, $33 billion; human services, $26.5 billion; organizations benefitting public and societal needs, $24.2 billion; health organizations, $22.8 billion; international affairs, $15.8 billion; arts, culture and humanities, $13.3 billion; and environmental issues and animal welfare, $6.7 billion.
And when disaster strikes anywhere in the world, we respond. We stepped up when the tsunami struck Japan, when an earthquake rocked Haiti. At here at home when Hurricane Katrina struck the Gulf Coast in 2006, more than $4 billion was raised to assist victims. We are still giving to victims since super storm Sandy struck in October.
However, as generous as the American people are, the economic crisis has significantly affected charitable giving, which remains $12 billion less today than when the recession began in 2008, and is predicted not to improve anytime soon. That is a real problem for the country: The nonprofit sector generates nearly 6 percent of U.S. gross domestic product, and pays $668 billion in wages and benefits to its 13.5 million employees.
The fiscal cliff further threatens charitable giving, as lawmakers on Capitol Hill consider capping or eliminating deductions, and a change to the charitable deduction could severely damage non-profits and the charitable work that generates enormous goodwill locally and globally.
A 2009 study by the Center on Philanthropy showed that the proposal to raise the marginal tax rate to 39.6 percent on those earning $250,000 or more and cap the charitable tax deduction at 28 percent would precipitate a 2.1 percent decline in giving, which works out to a $5 billion decrease.
However, a proposal by the Bipartisan Policy Center’s Debt Reduction Task Force would be far worse. It proposes to eliminate the charitable deduction altogether and replace it with a credit like the one used in the United Kingdom. Applying this practice to the U.S. level of charitable giving would cost $260 billion, devastating charities across America.
The Charitable Giving Coalition urged both President Obama and House Speaker John Boehner to protect the charitable tax deduction as they deal with the fiscal cliff facing America. The charitable deduction encourages individuals to give to those in need, and to give more than they would otherwise give by allowing them to offset some of their tax obligation with charitable contributions. Data suggests that every dollar a donor claims in tax relief for charitable donations produces three dollars of public benefit.
The significance of the charitable work of American non-profits is one thing that sets us apart from less charitable nations. It is a reflection of the generous heart of America, and the charitable tax deduction helps to fuel that generosity. That is why it must be protected. If we fail to stop this thoughtless process, Americans will be substantially hampered in their financial support of people in need, and we will all be the worse for it.
To the extent that government continues replacing the work of charitable organizations with taxpayer funded government programs, or impedes the charitable impulses of the American people with short-sighted tax policies, those of us who give to charity lose the ability to decide which projects and causes receive our financial support.
And as the failure to control profligate government spending continues to be ignored in favor of political considerations, the likelihood increases that charitable deductions will be targeted to help raise revenue to feed the government’s spending addiction.
Cross-posted from Observations