Charitable Donations Don't Always Go Where Needed Most

By Porter, Eduardo | International Herald Tribune, November 15, 2012 | Go to article overview

Charitable Donations Don't Always Go Where Needed Most


Porter, Eduardo, International Herald Tribune


Although Americans are generous in charitable giving, the money does not always go where it is needed most.

CORRECTION APPENDED

Anyone doubting Americans' charity should visit the Rockaway communities in Queens. Volunteers from all over the city and beyond have descended upon the devastated communities, providing cash, supplies and assistance to locals marooned in waterlogged homes without food or power. They are helping to fill a void in the government's sometimes plodding response to the disaster wrought by Hurricane Sandy.

"The government is doing its own thing," said Brett Scudder, a community advocate from Far Rockaway who has been walking up and down the boardwalk, helping to coordinate the relief effort. "They must get things approved. We don't have time for that now."

Roy Niederhoffer, a hedge fund manager who lives in New York and who has been delivering aid across the area, suggests that private citizens have a big role to play. "We can't rely on the government for all of this."

Ten days after the big storm hit the city , donations to aid the relief effort exceeded $116 million.

The outpouring of support highlights how central a role charity plays in the U.S. social contract -- Americans view themselves as generous, yet they do not trust the government to help those in need. This trust in charity is uniquely American. Americans pay less tax as a share of their income than citizens of virtually every other rich economy in the world. But they contribute more to charity than citizens of any other country.

When Democrats attacked the Republican presidential candidate Mitt Romney for paying only 13 percent of his income in taxes last year, his allies pointed out that the Romneys had given nearly 30 percent of their income to charity.

Support for charity has a partisan bias. Republicans much prefer charity to taxes. Democrats are more tolerant of bigger government. Still, 95 percent of all Americans say they donate to churches or other charitable institutions.

Earlier this year, Bank of America and the Institute on Philanthropy of Indiana University published their annual survey about charitable giving among high-net-worth households in the United States and found that faith in the government to help society was rather limited. Of the respondents, 91 percent said they trusted nonprofits to solve societal problems. Only 56 percent trusted the U.S. government to do so.

This confidence in the power of philanthropy may soon be tested. If a set of spending cuts and tax increases kick in Jan. 1 in the absence of a budget deal between Democrats and Republicans, the size of government will shrink considerably.

Those actions would cut nearly $900 million from the Federal Emergency Management Agency. The budget for teaching English to immigrants would lose more than $700 million. Special education and rehabilitation would lose $1.3 billion. There would be $140 million less for financial aid for poor students.

Even if Democrats and Republicans agree on a more gradual way to reduce the deficit over time, it seems that many important programs will be reduced.

Philanthropy, then, seems more important than ever. Looming cuts to U.S. programs and shrinking state budgets mean that charity will have a bigger void to fill. But one of the things that induces people to give to these causes is a break on their taxes. It is legitimate to ask whether a government pressed for money should be forgoing $40 billion a year in tax breaks, mostly pocketed by the rich for their charitable donations.

Should the government raise more money by cutting the charitable tax deduction for the wealthiest Americans, as President Barack Obama has proposed, even if philanthropy itself would take a hit from reduced contributions? Or should Americans stand by the Republican Party platform, which says that because of charities' vital role "fostering benevolence and patriotism," their tax preferences should not be touched? …

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