Many of us find our way into philanthropy because we want to be on the “resource side” of social change - to help get money to where it needs to go. And foundations certainly control a lot of money – The Foundation Center reports total giving in 2007 reached almost $43 billion. But once we start doing this work, it can feel like our grant budgets are never big enough, especially in today’s context. We’re deep in an economic crisis where 50 million Americans are living in poverty. Communities face tremendous need while at the same time foundation giving has declined. Even those of us on the “resource side” of the equation are finding ourselves looking for more resources.
So where will the money come from?
In philanthropy circles, this conversation often moves to one about fundraising. Growing the donor base is critical, and groups like Resource Generation and Bolder Giving are playing a necessary role in this by challenging new givers to not only give more, but to direct that giving to address the root causes of social, economic and environmental injustices.
But in order to make a fundamental shift in the amount of resources available to communities, we also need to bring taxes into the conversation.
Here are three reasons why the philanthropic community has a stake in the tax policy debates in 2010 and beyond:
1) Tax policy has the ability to increase the dollars available to foundations, since the higher the taxes for high-income and wealthy families, the more money that is given to philanthropic foundations. More progressive tax rates increase the resources available to the nonprofit sector.
2) By the same token, tax policy has the ability to decrease the dollars available to our sector. In fact, it’s happening right now. With the disappearance of the federal estate tax for 2010, we’re likely to see an estimated decline in charitable giving of $13-25 billion. And this is just the latest in a whole series of tax cuts for the wealthy that has shifted the tax burden to wage earners.
3) Philanthropy can’t be a substitute for what the public sector can provide. In 2009 Congress allocated $54 billion for food stamps (known as the Supplemental Assistance Nutrition Program). Without increasing payout, all foundations working together would be unable to meet the funding needs for just this one program. While we can – and should – debate where our federal resources go (and fund advocacy groups that are putting on the pressure!), philanthropy is no match for the government’s ability to fund the safety net, infrastructure, health care, and education. Our government relies on revenue from taxes to invest in these vital programs and that money should be raised from those with the greatest capacity to pay. Reversing the Bush-era tax cuts for high-income households is an important place to start – with the potential to raise over $43 billion in revenue a year.
Many people view philanthropy as an alternative to taxes, but our sector is inextricably linked to the tax code. There will be many opportunities in 2010 to work toward more progressive policy. The funding community can’t afford to be absent from these debates.
Alison Goldberg coordinates Wealth for the Common Good and is co-author of Creating Change Through Family Philanthropy: The Next Generation.