On Philanthropy: Tax reformers versus the “sole” of philanthropy

Contributed by AFP SEWI
Milwaukee Business Journal
March 10, 2017 issue

I just took my old work shoes to the resale shop.  Yeah, I could have chucked them in my back closet.  But I knew somebody out there would want them, and I knew I’d get a receipt for a little tax deduction.  I wouldn’t save a lot -- but, hey, every little bit helps, right?

If the charitable deduction can influence what I do with my old shoes, do you think it makes a difference to people who give away millions?  You bet.  Of the $265 billion Americans gave away in 2015, more than 80 percent came from taxpayers taking charitable deductions.

Has anyone told the nation’s lawmakers?

We did, on February 16.  On that day, dozens of representatives from the Association of Fundraising Professionals and the national Charitable Giving Coalition descended on Washington.  They met with legislators to blunt proposed tax reforms that would threaten the charitable deduction.

In the recent election, Americans voted to reduce the size of government; the administration dutifully plans to cut spending on social programs.  The presumption is that economic growth will encourage citizens and corporations to fill that gap with charitable gifts.  Maybe that logic works – but not if you also reduce donors’ giving incentive by ending the charitable deduction.

Fundraisers and funders alike agree.  Nancy Seidl Nelson, president of AFP’s Southeastern Wisconsin Chapter, says, “While wanting to make a difference in the community is the biggest driver for giving, tax incentives are important to contributors.  Nonprofit executives need to communicate to our representatives about our donors’ interests.” 

Ellen Gilligan, president and CEO of the Greater Milwaukee Foundation, adds, “Philanthropy comes from the heart, and giving at any level requires sound financial decision making. Preserving the charitable deduction encourages prudent investment with community benefit -- and it also signals at the highest level of government that personal and corporate generosity is valued and respected.”

Let’s keep the charitable deduction.  It’s been in place for 100 years.  It’s helped make America’s nonprofit sector the envy of the world.

It’s also made my closet cleaner – and the envy of my shoe-hoarding wife.

AFP’s monthly column in the Milwaukee Business Journal is edited by Doug Diefenbach, principal of Diefenbach Communications Strategies, a full-service consultancy specializing in philanthropic communications. Please contribute ideas for future articles here.