In late February, Jeff Cain noted (on this site) “There is so much misguided nonsense in print about the charitable deduction.” The intervening months have surely seen volumes added to the nonsense, but there is also much in print that will interest donors.
Last week, Earle I. Mack, a long time individual donor and member of numerous charitable boards, contributed his opinion to the Chronicle of Philanthropy with a piece entitled “I Give Millions to Charities. Here’s Why It’s Unwise to Limit Tax Breaks.” Mack argues that, without the charitable deduction, donors will be less likely to support “new groups” because they’re less likely “to take the risk of supporting unproven programs.”
I think there may be some question begging going on in Mack’s conclusion, but I’m more interested in his claim that, if, as a result of limiting the charitable deduction, private giving decreases, “The burden of supporting these charitable organizations will come right back to the government.”
In his February post, Jeff Cain referenced Alexander Reid’s fine article on the history of the charitable deduction. Reid's piece has been posted at the Philanthropy Roundtable site, and, in“A Boundary to Keep.” Reid raises concern about precisely the conclusion Mack draws: “Those who believe the purpose of the charitable deduction is to effect a subsidy argue that if charities did not provide education, poverty relief, scientific research, and healthcare, then the government would have to. The problem with that view is that if the purpose of the charitable deduction were to encourage charities to perform governmental services, charities should also be under government control….”
As Reid rightly notes, that is not the purpose of the charitable deduction and, if it were, the deduction is “poorly designed.” Instead, the deduction is “a mechanism for ensuring that the government does not lay claim to something it should not own: income earned by the people, controlled by the people, and devoted to the good of the people.” Jeff Cain excerpted these same words in his post on this site in February, but they bear repeating and re-posting.
There are, as Mr. Mack rightly notes, serious consequences to limiting the charitable deduction. But there are also serious consequences to misunderstanding the origins and the value of the deduction in preserving individual freedom. If the connection between personal freedom and robust philanthropy is to be respected and maintained, the conversation over the charitable deduction must rise above nonsense.