• August 1, 2014

Don’t Look Just at the Short-Term Battle Over Charity Tax Breaks

Congress has nonprofits in an uproar as it considers lowering, capping, or even outright eliminating the charitable deduction.

The deduction plays an important role in American philanthropy and is highly effective, providing roughly three dollars to charities for every dollar deducted. Even a slight change in the value of the deduction could result in billions of contributions lost, and elimination is estimated to cost the country nearly a third in total giving by individuals.

But nonprofits make a mistake to limit their advocacy to the deduction. The fight over the charitable deduction is a short-term battle about just one aspect of philanthropy: tax policy. The deduction is critical, but it’s simply one tool toward the greater goal of finding long-term solutions to the problems that face our country.

The challenges that charities seek to solve are increasingly massive, overwhelming, and interconnected. Even the largest, most resourceful charities are in no position to do it all. While traditional philanthropy—giving, volunteering, and advocacy—has a role to play in solving problems, nonprofits cannot make a difference all on their own.

It’s time for our national community to come together. Government, business, charities, and the public need to undertake a comprehensive discussion about how we can reignite philanthropy and work together to deal with the big challenges facing the United States.

It’s time to rethink our approach and policy toward philanthropy and develop new tools and resources—perhaps even an entirely new system of philanthropy—to help us create long-lasting change.

The last time we saw a major revolution in our country’s approach to philanthropy was in the early 20th century when the charitable deduction was introduced. That change helped set the stage for massive growth in giving—nearly $300-billion a year now. But think how much the world has changed since then.

In the nonprofit world alone, there are new types of hybrid organizations—part charity, part for-profit. Some major donors are beginning to eschew charity altogether in favor of financing for-profit social enterprises that make money and a difference. Technology is changing the way we can all communicate, coordinate our supporters, and produce results.

If we’re not keeping up with these trends and changes, then we’re limiting the impact nonprofits can ultimately have. So together, we need to develop new mechanisms and incentives to encourage long-term investment in philanthropy from corporations, foundations, individuals, and government—and ways that those partners can work together more easily.

We need to create policies that encourage more people to get involved with causes in their communities and feel like they are making a difference. We need tools that help charities work together to mobilize their resources in a coordinated fashion and focus on the sources of problems, not just the symptoms.

These are the kinds of conversations nonprofit leaders should have with members of Congress—identifying the time, money, thought, and resources that are needed to make change in our communities not just for tomorrow, but for decades into the future.

Promoting lasting change starts with the charitable deduction, but that can’t be the sole focus of nonprofit advocacy.

As people at nonprofits lobby Congress and communicate with other policymakers, they should talk about the impact of the charitable deduction. But they should also highlight what their organizations could do with greater resources and the improvements they could bring about in each community. And they must be candid about the kind of investment that is needed in order to lead to long-term change.

Each of us can be a part of that movement—a movement to rethink and reignite philanthropy. And it begins by engaging the country in a comprehensive discussion about the long-term sustainability of the nonprofit world and how we can harness the power of government, business, and the public to help solve society’s largest problems.

Andrew Watt is president of the Association of Fundraising Professionals.

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