The most radical, community-organizing-inspired proposal to come out of the Obama administration is not the recent National Labor Relations Board moves aimed at strengthening organized labor nor his push to create more green jobs. No, it is his new proposal to limit the tax subsidy for very wealthy people to make so-called “charitable” contributions.
Though designed with the best of intentions, this subsidy now provides a financial incentive for nonprofits to rely primarily on a handful of huge donors, rather than encouraging them to build a broad, small-dollar fundraising base — one that would inherently grant the nonprofit world much-needed independence from the elite’s narrow self-interests. Moreover, this tax break often ends up subsidizing the super-rich’s efforts to finance their own partisan causes — causes which represent the opposite of soup kitchens, mentoring programs or anything else that falls under the rubric of actual charity.
To understand how this all operates, recall that President Obama is not — even remotely — proposing to halt government subsidization of nonprofits. He’s merely proposing to minimally reduce the amount the very affluent can write off their tax bill when they make donations to 501(c)3 organizations from the current (huge) 35 percent of the contribution down to (the still pretty huge) 28 percent.
As the Chronicle of Philanthropy reports, this one provision alone would generate a whopping $400 billion for the U.S. Treasury and would apply only to those making over $200,000 a year — that is, to the top 3 percent of income earners.
The fact that such a modest proposal, affecting so small a part of the population, would generate such enormous revenue reflects how philanthropy in America now tracks the larger contours of our Gilded Age economy. Because they now control such a disproportionate share of national wealth, America’s rich make the lion’s share of tax-deductible philanthropic contributions. A 2006 survey found that the 3 percent of Americans with assets above $1 million “are responsible for nearly two-thirds of all charitable giving” (all this despite the fact that, as ABC News, “people at the lower end of the income scale give almost 30 percent more of their income”).