The Catholic University of America




Should Some Giving Matter More Than Other Giving?


If you put out some used clothes or an old sofa for pickup by Goodwill or some other charity, it’s a tax deduction. Write a check to support an endangered species, help your local arts center or fund your alma mater’s endowment, that’s a tax deduction, too. For that matter, so are designated emergency donations to help Haitian earthquake victims or survivors of Hurricane Katrina.
But are the goals of these tax-sheltered donations equally meritorious? Should it even matter to Uncle Sam? That was the key question under consideration at an April 14 panel at the National Press Club sponsored by Catholic University’s Columbus School of Law.
“Philanthropy in the 21st Century: Should All Charities Be Created Equal?” was the fourth and final program of the year in a series of symposia designed to shine new light on little-discussed but important intersections of law and ethical and moral responsibility.
Organized by CUA Law Professor Roger Colinvaux, the event brought four experts together for a 90-minute examination of whether the tax exempt status of charitable organizations, and most charitable giving, should continue in its present form.
Current tax laws essentially draw no distinction between the ultimate purposes of charities, so long as they meet the basic criteria for tax-exempt status. The Obama Administration has proposed cutting back on the charitable contribution deduction. But if people have less incentive to give, should that affect all charitable giving equally?

“This is a moment of clarity for us,” said Professor Colinvaux (left) setting up the discussion to follow. “Which charities do we need and want to succeed? Which are served best by the current pluralistic system?”
Duke University law professor Richard Schmalbeck said it’s clear that some charities, such as a soup kitchen that delivers direct service to the needy, does more good for society than adding a second wing to the local opera house. Yet current tax law favors donations to the latter cause because its supporters, who are generally in higher income brackets, tend to itemize their tax returns. Non-itemizers who give mostly cash get less tax benefit.
Diana Aviv, president and CEO of the Independent Sector, a national leadership forum for America’s nonprofits, agreed that higher and lower income taxpayers tend to select different causes to support. But does government have the obligation to level things by changing the tax law?
“Who decides what kind of services qualify for special treatment?” asked Aviv, (above left) arguing that attempts to favor one charity over another are fraught with difficulty. 
Eugene Steuerle, Richard B. Fisher chair and Institute Fellow at the Urban Institute, pointed out that only a fraction of social service spending, about 2 percent, comes from charitable giving. The vast majority comes from the government, he noted, so policies that attempt to tilt giving towards direct service charities may have less of an impact than people think.
All of the panelists agreed that a down economy wallops charitable giving, especially giving to basic needs charitities. Should congress attempt to rectify that?
Russell Sullivan, staff director for the Committee on Finance of the U.S. Senate, said there is no immediate plan to create special tax-exempt categories for basic needs charities similar to how the IRS treated donations in the wake of Hurricane Katrina and the more recent earthquake in Haiti.    
“I don’t think we’re anywhere near going down that road,” said Sullivan (above right). “But perhaps we could put our toe in the water.”
Professor Schmalbeck said that although it’s tempting for congress to react to major disasters with favorable tax treatment for donations, it is a “troubling” tendency.
“Lesser known causes can lose out when congress cherry picks charitable causes for favorable treatment,” he said.
The discussion concluded with a 20-minute question-and-answer session with the audience.