Posts Tagged ‘donors’
January 13, 2012
The Nonprofiteer’s readers might enjoy this account of a pissing match between Warren Buffett and Mitch McConnell. The Senator from Kentucky has been urging the Sage of Omaha to make voluntary contributions to the Treasury if he felt he was undertaxed. Buffett has now responded that he’ll match any such contributions made by Republican Senators.
This dialogue makes in a different form Milton Friedman’s point as recounted by the Nonprofiteer yesterday. Voluntary contributions to reduce poverty (or do any of the other things we rely on the government to do) are insufficient, because everyone would be willing to pay his/her share only if s/he could be sure that everyone else would be willing to pay his/her share. Otherwise, no dice.
Doubtless McConnell will ignore Buffett’s challenge and continue his nonsensical bluster about Buffett’s freedom to pay extra if he feels “guilty” about his low tax rate. But the point isn’t, of course, how Buffett feels, or even what he does—it’s what everyone else does. And if McConnell and his buddies don’t donate to the Treasury, then they are poster children for the free-rider problem—thereby proving Buffett right: philanthropy is not sufficient and taxation is necessary.
H/T the indispensable Rick Cohen at The Nonprofit Quarterly.
Tags:501c3, charity, donors, IRS, nonprofit, not for profit, philanthropy, Poverty, social capital
Posted in Coverage of nonprofits, Current Affairs, Finances, Government grants, Nonprofits--General, Philanthropy and Taxation, Poverty, Private Philanthropy | Leave a Comment »
January 11, 2012
I am distressed by the sight of poverty; I am benefited by its alleviation; but I am benefited equally whether I or someone else pays for its alleviation; the benefits of other people’s charity therefore partly accrue to me. To put it differently, we might all of us be willing to contribute to the relief of poverty, provided everyone else did. We might not be willing to contribute the same amount without such assurance.
Therefore, this wild-eyed radical continues, the government must step in. If poverty is to be alleviated, everyone must be taxed so that no one gets a free ride to the benefits of poverty eradication.
How appalling! How socialistic! Of course, what else could one expect from an ivory-tower academic complete with Nobel prize?
No, not that one (or even that one): Milton Friedman.
When the man said “There ain’t no such thing as a free lunch,” he meant it.
H/t Allen R. Sanderson.
Tags:501c3, charity, donors, IRS, nonprofit, not for profit, philanthropy, Poverty, taxation
Posted in Coverage of nonprofits, Finances, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Poverty, Private Philanthropy | 1 Comment »
January 10, 2012
From an article in the New York Times whose date the Nonprofiteer neglected to notice:
“It’s admirable when people back their charitable impulses up with donations,” said Scott Klinger, tax policy director of the group Business for Shared Prosperity. “But the tax code shouldn’t allow the wealthy the kind of loopholes that let them, essentially, force other taxpayers to underwrite donations to their pet causes.”
“The kind of loopholes . . . “ Is there some other kind? That is, can we have the tax code encourage individual generosity without delegating to private individuals decisions about what constitutes the public good? The Nonprofiteer doesn’t see how. Either you have a tax subsidy—which means by definition that other taxpayers bear a bigger burden—or you don’t.
Without the subsidy, current donors might give less but the government would have more to give out to public causes (health, education, welfare) now privately supported. And perhaps without the subsidy, current donors would be replaced by those less-burdened other taxpayers in a burst of their own generosity. And maybe this would mean fewer snow-globe museums and more attention to human services in the nonprofit sector.
Or maybe it would just mean a reduction in charity and an increase in the government’s resources, which could then be used on public education and public housing. Or missiles and drones.
This is why the Nonprofiteer remains at war with herself over the charitable deduction. She wants a thousand flowers to bloom. She believes any free society requires a counter-balance to whatever the current government has decided about anything. And she believes this counter-balance requires money. The whole point of the nonprofit sector is that it permits people to identify and respond to their own needs in their own communities, producing a closer fit between service and community than is possible with centralized programs.
But she also believes that society-wide priorities should be funded society-wide, which means limiting the number of pots of money exempted from inclusion in the public fisc. And she doesn’t want society-wide priorities to be determined by people who have so much money they can buy entire public school systems and experiment on them.
To quote the great Yul Brenner: Is a puzzlement.
Tags:501c3, charity, donors, Fundraising, IRS, nonprofit, not for profit, philanthropy, politics, social services
Posted in Finances, Government grants, Mission, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Relations with funders, Social Service Agencies | Leave a Comment »
December 20, 2011
The most powerful argument Jack Shakely makes in his LA Times op-ed piece opposing the charitable tax deduction is that it’s a poor trade-off. The retired foundation executive points out that charities have permitted themselves to be shorn of their ability to influence policy and politics in return for a mess of pottage. Of course the restrictions on charitable participation in the public arena aren’t as draconian as nonprofit executives (and especially Boards) think they are—but the point is that nonprofits understand themselves to be constrained, and rather than bothering with the details remain quiescent politically.
As strong a proponent as the Nonprofiteer is of the pursuit of individual gifts, in the real world virtually every social service agency needs seriously more government money if it’s going to make any dent in the social problems it faces. The more social service agencies feel free to advocate for this particular budget bill or that particular provision in a piece of legislation—both prohibited by the current tax-code provisions—the more likely it is that those bills and provisions will pass, which would serve way more of the agencies’ clients than the most blue-sky estimates of their potential for growth in individual giving.
And for someone with foundation cred to say this! All hail Jack Shakely.
h/t The Nonprofit Quarterly Newswire.
Tags:501c3, Advocacy, charitable tax deduction, charity, donors, Executive Director, Fundraising, IRS, nonprofit, not for profit, philanthropy, Relations with funders, social services
Posted in Advocacy, Coverage of nonprofits, Current Affairs, Fundraising, Government grants, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Social Service Agencies | Leave a Comment »
November 29, 2011
Look, there are numerous “good cases” where one can see that infusion of capital that doesn’t really have to be repaid at market rates makes good sense. (Actually, government loan guarantees of, say, solar power start-ups falls into this category.) The problem with allowing 501(c)(3)’s to make these sorts of investments is that the process is subject to abuse.
Say that I want to create “Stuart Levine’s Good Works Foundation.” The Foundation attracts $10M in tax deductible contributions. The Foundation uses the cash to “invest” in projects operated either by me or my Aunt Minnie. While Minnie and I invest our own funds in these businesses, our capital position is ahead of the Foundation’s and gets a higher return, so that the first profit out goes to pay us and, if the deal craters, the biggest part of the hit will fall on the foundation. (Did I mention the $250K a year consulting fee paid to me by the investment entity?)
I don’t for a minute believe that the Bill and Melinda Gates Foundation is engaged in double-dealing of the sort that I described. I have less faith in the “Stuart Levine’s Good Works Foundation.” Has everyone forgotten the Pallottine Fathers? See here:
http://tvnews.vanderbilt.edu/program.pl?ID=254962
Or, as one might say, everything old is new again.
The burden of proof rests on those who believe L3Cs are essential. They must demonstrate that the entities’ potential for abuse is outweighed by their capacity to meet needs that are otherwise unmet. But all that’s unmet so far is that burden of proof.
Tags:501c3, charity, Conflict of Interest, donors, foundations, nonprofit, not for profit, philanthrocapitalism, philanthropy, Relations with funders, social entrepreneurship
Posted in Conflict of Interest, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Investment, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Relations with funders, Social enterprise | 3 Comments »
November 22, 2011
Now here’s something that breaks the Nonprofiteer’s heart: the MacArthur Foundation is making grants to a dozen libraries and museums nationwide to establish youth computer learning centers modeled on YOUMedia, the Chicago Public Library’s innovative youth learning project.
Why does such good news evoke such profound sorrow? Because the Nonprofiteer can remember when the notion was that the philanthropic sector would serve as a laboratory, trying out new approaches to solving social problems and then passing along the ones that worked to be funded by the government. What we have here, however, is a model already vetted in the public sector whose future sustenance apparently will have to come from private charity.
This role-reversal is particularly galling here in Chicago, where the reward for the library’s pioneering work has been a substantial chop in the city’s library budget.
It’s hard to read a computer screen, or learn anything, when the world is upside-down.
Tags:501c3, charity, Chicago, Chicago Public Library, donors, MacArthur Foundation, nonprofit, not for profit, philanthropy, recession
Posted in Charity scandals, Current Affairs, Education, Finances, Government grants, Mission, Nonprofit management, Nonprofits--General, Poverty, Private Philanthropy, Public private partnerships, Technology | Leave a Comment »
November 18, 2011
While the Feds debate the future of the charitable deduction (among many other aspects of the tax code), some states are diving in with modifications to their own tax subsidies to charity. Michigan, for instance, will apparently permit a tax credit for donations (available for the past forty-plus years) to expire at year’s end.
Naturally, nonprofit leaders are distressed and are giving voice to their concerns. The Nonprofit Quarterly reports:
According to Michigan Radio, the credit allows Michigan taxpayers to essentially double their contribution when they give to community foundations, homeless shelters, food banks, and public institutions (such as Michigan universities, museums, public libraries, and public broadcasting stations).
The tax credit has been eliminated as part of the governor’s plan to pay for a business tax cut. According to the Detroit News, 250,000 made use of the credit in 2010, and it earned $100 million for Michigan charities and provided $40 million in write-offs.
You won’t find the Nonprofiteer cheering any endeavor designed to pay for a business tax cut, especially when it’s so well-documented that many businesses pay nothing like the nominal rate–or even pay nothing at all. But it’s too simple, and not exactly correct, to argue that the tax credit earned $100 million on a $40 million investment. First, we don’t know how many of those gifts to charities would have been made anyway. Second, as is the case with all tax subsidies, the money taken from the public fisc doesn’t support the same public purposes it would if the taxes were paid. If Michigan traded $40 million worth of public schools and police officers for $100 million worth of private schools and university police forces, is it really better off? The allocation of funds matters as much as, if not more than, the raw amounts.
NPQ further quotes a representative of the Community Foundation for Southeast Michigan:
Studies have shown that people give to charity because they care about the cause, but tax policy influences how much people are able to give . . . . We anticipate that with the loss of the tax credit, people will give to charities they’ve supported in the past, but they will give less because it costs them more.
She may be correct, but that’s actually less an argument for maintaining the credit than for raising the tax rate on individuals. The higher the tax, the greater the value of any tax subsidy, and therefore the more likely individuals are to make tax-subsidized gifts.
That’s the theory, anyway. We’ll all be interested to see how this turns out.
And meanwhile, the Cook County Assessor has begun the process of returning Northwestern Memorial Hospital buildings to the property tax rolls, after a court ruled they were not “charities” and therefore not entitled to continued exemption under the state Constitution. The Illinois situation is worth watching because it represents a modification to tax subsidies not by the legislature but by the courts–meaning something not subject to public pressure or comment.
The Nonprofiteer is NOT arguing against “activist judges,” or any nonsense of that kind. The Illinois Supreme Court’s rulings in this area have been (in her view) utterly within the four corners of the Illinois Constitution. She’s merely making the point that sector-wide outcry will have no impact on judicial changes to the tax environment–which means that one way or another we’ll all find out soon how important tax subsidies really are.
Tags:501c3, charity, Chicago, donors, nonprofit, not for profit, philanthropy
Posted in Coverage of nonprofits, Current Affairs, Finances, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Public private partnerships | 1 Comment »
November 8, 2011
. . . wrote Andy Rooney in this long-ago essay. This makes as much sense to the Nonprofiteer as anything else Andy Rooney ever said, which is to say, not much. What does it mean to “deserve” charity, beyond needing it? As George Bernard Shaw’s Alfred Doolittle memorably explained in Pygmalion,
If theres anything going, and I put in for a bit of it, it’s always the same story: “Youre undeserving; so you cant have it.” But my needs is as great as the most deserving widow’s that ever got money out of six different charities in one week for the death of the same husband. I dont need less than a deserving man: I need more. I dont eat less hearty than him; and I drink a lot more. I want a bit of amusement, cause I’m a thinking man. I want cheerfulness and a song and a band when I feel low. Well, they charge me just the same for everything as they charge the deserving. What is middle class morality? Just an excuse for never giving me anything.
Philosopher Matt Zwolinski made the same point in somewhat more formal terms.
T]he mere fact that there is a valid moral distinction to be made does not entail that we want our public policies to make it. It is, after all, difficult to discern between the deserving and the undeserving – maybe especially for governments, but for private charities too.
And Jewish folklore provides yet another version. The story is told of a rabbi who gave a beggar $100 and then faced the reproaches of his wife, who’d seen the beggar’s wife wearing fur. “He told me he needed it, and I had it, so I gave it to him,” replied the rabbi. “What he does with it after is none of my concern.” The point is that generosity is the process of separating yourself from your money, not the process of evaluating someone else’s virtues.
Does the Nonprofiteer tend to give her money to causes she judges worthwhile (and therefore deserving) and to agencies she believes are efficient (and therefore deserving)? Of course. But does she worry about whether the UN Population Fund is providing assistance only to women who became pregnant by an angel, or whether the ACLU vindicates the rights only of upright church-goers? Of course not. People who need help, deserve help. End of conversation.
Tags:501c3, ACLU, charity, deserving poor, donors, Fundraising, nonprofit, not for profit, philanthropy, Poverty, Relations with funders, UNFPA
Posted in Coverage of nonprofits, Fundraising, Mission, Nonprofit management, Nonprofits--General, Poverty, Private Philanthropy | Leave a Comment »
November 3, 2011
Thanks to Thomas Cott of You’ve Cott Mail for pointing the Nonprofiteer to this article in Crain’s New York Business about the value of collaboration among small arts organizations as typified by the Lower Manhattan Arts League.
The league — which includes small groups like Access Theater and larger organizations such as Dance New Amsterdam and the Children’s Museum of the Arts — has monthly meetings where constituents help each other with everything from fundraising to legal advice. The groups have created a downtown cultural festival, which they produce in the fall and spring. The members even apply for some grants as one entity and lobby the city government as a pack. Individually, some members with budgets as small as $100,000 are barely on funders’ radar, but as a group the members generate around $14 million in economic activity per year and employ roughly 1,200 people full- and part-time. After years when none of the groups were able to score a grant from American Express, for example, the consortium applied together in 2009 and was awarded $100,000. They divvied up the money according to the size of each budget.
While the cheery tone of the article elides some of the serious difficulties arts organizations face in aligning their missions and needs with one another, the point is nonetheless well-taken: organizations too small to get attention on their own may be big enough when combined with others to secure foundation funding and government cooperation.
Such collaborations also serve as living ripostes to the chronic funder complaint that the supply of arts organizations exceeds the demand for them: if these disparate groups can work together without cannibalizing their audiences or funding, they must not be duplicating each other’s work. Or, as it is written: the whole [collaborative network] is greater than the sum of its parts.
Tags:nonprofit, not for profit, Fundraising, charity, philanthropy, arts groups, foundations, theater, Relations with funders, donors, public funding for the arts, 501c3, collaboration
Posted in Nonprofits--General, Mergers, acquisitions and consolidations, Relations with funders, Coverage of nonprofits, Arts Organizations, Management Advice Day tip, Advocacy, Mission, Nonprofit management, Government grants | 3 Comments »
November 2, 2011
Ellen Alberding’s interview with the Chicago Tribune in advance of the Independent Sector‘s meeting in Chicago earlier this week pressed nearly every one of the Nonprofiteer’s buttons. Ms. Alberding, head of the Joyce Foundation, described the Foundation’s approach to what even she characterizes as a perfect storm of increased need and reduced resources in the nonprofit sector:
We do what any good business person would do when faced with reduced resources. We have become very focused on first maintaining support of our core grantees. Foundations are required to spend a minimum amount — 5 percent of our assets. On occasion, we will overspend that in order to keep our grantees whole.
In other words, business as usual. Most likely the Joyce Foundation’s governing documents prevent its Board from spending its assets down to zero, but there’s no reason why the Foundation shouldn’t use more than the statutory minimum 5% of its $800 million in assets to sustain the work it exists to support. Foundations are NOT businesses; they exist to give their money away, and only in some vague theoretical sense is an institution with $800 million facing constraints preventing it from giving away more than $40 million.
If Joyce gave only 6% instead, that would be another $8 million available to nonprofits in its areas of concern—a not-insubstantial 20% increase. What is stopping the Foundation from doing this, other than a misguided sense that preserving its capital is more important than doing its job?
And then the cherry on the sundae:
It’s the position of the Independent Sector that a cap [on charitable deductions] will reduce charitable contributions across the board and diminish support for nonprofit organizations. I believe it’s the administration’s view that the 28 percent cap might have some impact, but it wouldn’t have a dire impact. (But) I think we have to listen to the organizations themselves, who feel otherwise.
In other words, notwithstanding reality, the prejudices of self-interested parties will dictate the organization’s behavior. Their minds are made up—don’t confuse them with the facts. But as President of the organization, doesn’t it behoove Ms. Alberding to make sure her members don’t make their decisions based on fantasy?
Grrrr.
Tags:501c3, Board of Directors, charity, Conflict of Interest, donors, Endowment, foundations, Fundraising, grantmaking, grants, IRS, nonprofit, not for profit, philanthropy, politics, recession, Relations with funders
Posted in Boards of Directors, Conflict of Interest, Coverage of nonprofits, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Fundraising, Investment, Mission, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Relations with funders | Leave a Comment »
