Friday, July 17, 2009

Attack on the Charitable: Love Thy Neighbor Obama Style

Changing the tax code on charitable giving. Way to go Mr. Obama, I mean President Obama.

The War ON Philanthropy

Charity is said to be a virtue without compare, and yet we all know that it arouses suspicion—about the giver’s display of his generosity, the recipient’s dependency, some essential inequity that the gift only reinforces. Perhaps for this reason, Maimonides argued that the highest level of charity was not charity at all but rather helping the needy find the means by which to earn their own living.

In democratic America, what charity is and what it ought to do have been redefined in this spirit from the bestowing of alms to the performance of public-spirited works of all sorts by voluntary associations of citizens. Over the past century, such associations have grown and gradually coalesced into an economic “sector” of their own, albeit one that is not dedicated to the pursuit of profit. The chamber of commerce, the soup kitchen, churches and synagogues, the Berlioz Society, the university, Commentary—these are all voices in the chorus of American nonprofits, which collectively account for 11 percent of the overall U.S. economy.

Charitable organizations have suffered along with everyone else from the present economic crisis. Estimates by the Independent Sector, a philanthropic umbrella group, are that charitable assets are collectively down by nearly a third. Some organizations have shut their doors, and the survivors have had to make painful adjustments, let go of staff, abandon projects, and scale down ambitions for years to come, at precisely the moment when their services and patronage are needed most.

It was therefore surprising, and instructive, that at the same time the Obama administration was extending bailouts to troubled industries thought to be systemically or strategically important, it also presented for national consideration a change in tax policy that seemed like nothing less than a direct assault on the ravaged coffers of nonprofits. For almost a century, about as long as the U.S. has levied a significant tax on income, government policy has encouraged charity by exempting donated dollars from its reach. But in February, the administration announced that it would seek to raise revenue for its ambitious spending programs by reducing the charitable deduction for the highest two income-tax brackets by as much as 30 percent—this, when their marginal rates will already rise respectively to 36 and 39.6 percent in 2011.

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